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May 11, 2009

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Vol. 25, No. 10 May 11, 2009

Cover Story

TraNsaTlaNTic UNioN

10 Unattractive Unionby James Perloff — It is now clear that European nations were deceived into joining an economic union that became a political union, yet our leaders still seek a similar economic union with the EU.

FeatureS

ENErgy

17 The High cost of cap and Tradeby Warren Mass — Cap-and-trade programs to control carbon-dioxide emissions will further damage the economy.

EcoNoMy

21 cancerous growth of governmentby Alex Newman — The private sector struggles while big government grows even larger.

HoMElaNd sEcUriTy

24 Everyone’s a Threatby William F. Jasper — Obama’s Department of Homeland Security and federal-state “Fusion Centers” target millions of Americans.

ProfilE

28 Pyramid schemes Put in Perspectiveby Charles Scaliger — Kreuger and Madoff were caught doing what governments do as a matter of course through central banking.

HisTory — PasT aNd PErsPEcTiVE

34 lessons of the Weimar republicby Michael E. Telzrow — Hyperinflation easily leads to loss of liberty.

THE lasT Word

44 obama’s counterproductive Planby John F. McManus

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34DepartmentS

5 letters to the Editor

6 inside Track

9 QuickQuotes

32 The goodness of america

40 Exercising the right

41 correction, Please!

10

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construing the constitutionIn “Dangers of ‘Judicial Supremacy’ ” (March 2), Edwin Vieira, Jr. claims that ju-dicial review — the power of the Supreme Court to strike down congressional and state laws it deems “unconstitutional” — is not only “legitimate,” but also a practical neces-sity, as the court must often “construe” the Constitution in the course of deciding what the Constitution describes as “Cases” and “Controversies” that come before it. How-ever, judicial review is neither stated nor im-plied in the Constitution, but was simply as-sumed by the falsely brilliant John Marshall in the specious Marbury v. Madison case (1803). The sole function of the appellate jurisdiction of the Supreme Court is to ad-judicate on the basis of the laws in the case. The “construing” of the Constitution need not and should not enter into it at all. Indeed, judicial review has gradually led to the very judicial supremacy Vieira impugns in his article. This is the view of Thomas Higgins in his classic Judicial Review Unmasked, as reviewed by the late Medford Evans (Ameri-can Opinion, November 1981).

Tim Keller

Watertown, New York

Political PosturingMany times I’ve had the urge to fire off a letter to the editor, but only once have I done so, until now. In the March 2 edition’s Quick Quotes, compiled by John F. McManus, there is a picture and quote by South Caro-lina Senator Lindsey Graham. Criticizing Obama’s stimulus package, Graham says, “If this is change we can believe in, America’s best days are behind her.” Oh, is Graham suddenly a conservative?

Yes, we in South Carolina have read or heard of Graham’s pontifications, but it was all a ploy by him to appeal to conservatives. McManus took the bait! The stimulus pack-age already had the votes to pass, so there was “no risk” to Graham taking the conser-vative view.

Quickly, Graham

reverted back to his true Northeastern thinking. The next week on ABC News, he agreed with Maxine Waters on “bank nation-alization.” Maxine and Graham represent conservatives? Is Graham’s staff “laughing out loud” to think that The New AmericAN magazine put a conservative slant on him?

If you want to see “conservative” in thought and action, follow South Carolina’s Senator Jim DeMint. He does well represent-ing South Carolina and the Constitution.

ThomAs PlowdeN

South Carolina

The New AmericAN did not claim Lindsey Graham (R-S.C.) was either “conservative” or liberal. We merely repeated an interest-ing quote he made. We rate how every mem-ber of the House and Senate votes on key issues in our “Freedom Index,” a congres-sional scorecard based on the Constitution. Senator Graham’s cumulative FI rating for the 110th Congress (2007-2008) was 53 percent. — Ed.

Proper ParlanceIn a “Letter to the Editor” published in the April 13 issue of The New AmericAN, Mr. Losch objects to the reference of “America’s Judeo-Christian heritage.” Yes, America was established as a Christian nation, to which there is no argument from me. But to attempt to discredit the Judeo-Christian heritage is to be intelligently ignorant of those leaders who created our nation. History reminds us that these men were very well versed in the Old Testament. Therefore, the use of the phrase “Judeo-Christian” is very much in order in describing America’s heritage. The use of the Ten Commandments by our Chris-tian folks is another example of the Judeo background to our way of life, even though the Christian version changed the wording of the sixth commandment to read, “Thou shalt not kill.” The Old Testament, Exodus 20:13, reads, “Thou shalt not murder.”

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Selwyn Duke Jodie Gilmore

Gregory A. Hession, J.D. Ed Hiserodt

William P. Hoar R. Cort Kirkwood

Warren Mass Llewellyn H. Rockwell, Jr.

Alan Scholl Ann Shibler

Liana Stanley Michael E. Telzrow

Joe Wolverton II, J.D.

Editorial Assistant Denise L. Behreandt

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LETTERS TO THE EDITOR

Is there another alternative to paying tribute to Somali pirates, other than sending a huge naval expedition force to rout the pi-rates out of their lairs? Congressman Ron Paul (R-Texas) believes the Constitution’s long-neglected “marque and reprisal” provi-sion may offer a viable option. Article I, Section 8 of the Consti-tution states: “The Congress shall have power … To define and punish piracies and felonies committed on the high seas, … To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water.”

Throughout history, privateers have played an important role in combating piracy, and there’s good reason to think they could do so again. As in the early years of our nation, Congress could issue letters of marque and reprisal authorizing private parties — individuals or corporations — to go after pirates and/or terror-ists. Rep. Paul made the same proposal in 2001, introducing the “Marque and Reprisal Act of 2001” to target Osama bin Laden and other terrorists involved in the 9/11 terror attacks.

Placing bounties on the heads of villains would cost only a few tens of millions of dollars, versus the hundreds of billions we

are spending in the ongoing War on Terror. When dealing with elusive, non-state actors like pirates and terrorists, Ron Paul’s ap-proach would seem to make much more sense than current poli-cies. There are very likely plenty of Special Ops/Special Forces operators who are ready, able, and willing to have a go at the Somali pirates.

Piracy solution: letters of Marque and reprisal

President Obama scored major political points for the successful rescue of Captain Richard Phillips from his Somali pirate captors. Media headlines hailed his “decisive leadership” in his baptism under fire. However, scuttlebutt from the Navy community claims that the rescue succeeded in spite of Obama’s indecisiveness and interference, not because of his leadership. A harsh critique of the standoff by an anonymous Navy veteran that is circulating widely claims that Team Obama attempted to micromanage the situation, overruling the on-scene commander and imposing ri-diculous rules of engagement that repeatedly prevented the Navy SEAL shooters from taking out the pirates.

“What should have been a standoff lasting only hours — as long as it took the USS Bainbridge and its team of NSWC [Naval Surface Warfare Center] operators to steam to the location — be-came an embarrassing four day and counting standoff between a ragtag handful of criminals with rifles and a U.S. Navy warship,” the critique says.

Our globalist-minded policy elites have the solution for piracy: more power for the United Nations. Ratification of the UN Law of the Sea Treaty (LOST) is a “top priority” for the new Obama administration, according to Secretary of State Hillary Clinton. Articles 100-107 and Article 110 of the UN Law of the Sea Treaty deal with piracy. However, ratification of LOST would greatly hamper U.S. ability to deal with pirates, as it would restrict hot pursuit in territorial waters, pursuit on land, and interdicting and boarding pirate ships on the high seas, and it would prohibit the

The critique, which claims to be based on conversations with Navy SEALs, notes: “Philips threw himself off of his lifeboat prison, enabling Navy shooters onboard the destroyer a clear shot at his captors — and none was taken. The guidance from National Command Authority — the president of the United States, Ba-rack Obama — had been clear: a peaceful solution was the only acceptable outcome to this standoff unless the hostage’s life was in clear, extreme danger.” The critique cites a litany of specific interferences that allegedly prolonged the standoff for days and endangered the life of Capt. Phillips.

A Special Forces veteran contacted by The New AmericAN said he “couldn’t vouch for all the specifics in the critique,” but that all the main points “appeared to be valid on the face of it.” The most obvious fact, he noted, was that when Capt. Phillips heroically jumped into the sea, “the SEALs would have shot the pirates or the Bainbridge would have blown them out of the water,” except for being countermanded by Obama.

option provided in the U.S. Constitution of granting letters of marque and reprisal to private actors to pursue pirates.

The UN LOST would affect much more than our policies toward pirates. It would dangerously undermine national sover-eignty and transfer vast new powers to the United Nations to control and/or regulate virtually all human activity on, over, or under the oceans, including the seabed, coastal areas, and inland waterways (rivers, streams, and lakes) that empty into the oceans. (See “LOST: The Law of the Sea Treaty” in our March 2 issue.)

obama: Hero or Villain in Pirate rescue saga?

globalist Piracy solution: Empower the UN

The guided-missile destroyer USS Bainbridge tows the lifeboat from the Maersk Alabama to the amphibious assault ship USS Boxer. Three Navy vessels were used in this rescue.

Inside Track

6 THE NEW AMERICAN • MAy 11, 2009

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President Barack Obama said in his April 18 weekly address that we can “get our deficits under control and move from recovery to prosperity” by getting rid of “dozens of government programs shown to be wasteful or ineffective” and, in general, making gov-ernment more “efficient” and “accountable.” He also said that he has “assembled a team of management, technology, and budget experts to guide us in this work.”

Obama specifically pointed to the following experts:• Jeffrey Zients, who “as the first ever Chief Performance Of-

ficer … will work to streamline processes, cut costs, and find best practices throughout our government”;

• Aneesh Chopra, who in his role “as America’s Chief Tech-nology Officer … will promote technological innovation to help achieve our most urgent priorities — from creating jobs and re-ducing health care costs to keeping our nation secure”; and

• Vivek Kundra, who as Chief Information Officer “is respon-sible for setting technology policy across the government, and using technology to improve security, ensure transparency, and lower costs.”

But can these experts really help solve our fiscal and economic woes? The fact that Obama himself has not demonstrated fiscal frugality as either a senator or president does not give cause for hope. In the U.S. Senate, for instance, he voted for creating the $700 billion TARP fund, thereby helping to create the projected deficit of over $1 trillion he inherited for the current fiscal year. Then as president he lobbied for the $787 billion “stimulus” leg-islation and proposed a budget forecasting a $1.75 trillion deficit for the current fiscal year. His budget also called for spending $3.9 trillion this fiscal year and spending $3.6 trillion next year as compared to $3.0 trillion for fiscal 2008.

President Obama is advocating more government, not less. He wants to make the socialism he advocates more efficient, but ef-ficient socialism is not the answer.

“Efficient” socialism is Not the answer

“Mexico as the ‘pier,’ Arizona as the ‘docks’ ” — meaning that Mexico serves as the initial port of entry while Arizona supplies the warehousing and transportation facilities — is the vision of John Munger, chairman of the newly formed political action com-mittee ImagineArizona.

The Arizona Daily Star spoke with Munger and reported on April 10 that his goal is to have Arizona “encourage Mexico to build a major deep-water port on the country’s northern west coast,” probably “near Guaymas, about 250 miles south of Ari-zona in Sonora.” According to the Daily Star, Munger sees that the “shipping ports in Los Angeles and San Diego are near ca-pacity at a time of growing Asian markets.” The ImagineArizona website calls this an “opportunity” for Arizona to “become a criti-cally important and large part of a major international sea port serving shipping from all parts of Asia, including China, Japan and Korea.”

The Environmental Protection Agency on April 17 proposed new regulations to control carbon dioxide (CO2) and five other “greenhouse gases” as “pollutants” under section 202(a) of the Clean Air Act. While not mentioning what aspects of carbon-dioxide emissions will be regulated, the carbon dioxide emitted

Therein lies the rub. While Munger and ImagineArizona por-tray only the benefits increased international trade would bring to Arizona, they are not considering how the U.S. economy would be harmed by increasing the flood of cheaply made foreign prod-ucts that no American company can afford to compete with. Also, this close cooperation between Arizona and Mexico will only serve to strengthen the move toward hemispheric integration that President George W. Bush began with his Security and Prosperity Partnership agreement with Canada and Mexico.

from automobiles and power plants is definitely on the regula-tion block. The first step toward costly and far-reaching regula-tions is that the EPA establish carbon dioxide as a regulatory “pollutant,” even though all green plants need carbon dioxide for photosynthesis and all animals exhale carbon dioxide.

“Mexico as the ‘Pier,’ arizona as the ‘docks’”

The EPa Proposes New regulations to control co2 Emissions

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On April 15, the deadline for U.S. taxpayers to mail their income tax returns, hundreds of thousands of Americans from coast to coast participated in approximately 2,000 nationally inspired but locally organized “Tea Party” protests. Fox News featured live TV broadcasts from four cities — San Antonio, Sacramento, At-lanta, and Washington, D.C. — featuring Fox personalities Glenn Beck, Neil Cavuto, Sean Hannity, and Greta Van Susteren.

Tea Party participants and their signs reflected a variety of ideological outlooks ranging from constitutionalist and libertar-ian to populist and neoconservative. The New York Times reported that in downtown Houston, a crowd of 2,000 filled the Jesse H. Jones Plaza and that, among them, were some who wanted Texas to secede. The Times noted that the tax protesters were joined by “anti-abortion activists, Libertarians, and fiscally conservative Republicans.” Amidst a sea of American flags, hand-painted signs bore messages such as: “Abolish the I.R.S.,” “Less Government More Free Enterprise,” “We Miss Reagan,” and “Honk if You Are Upset About Your Tax Dollars Being Spent on Illegal Aliens.”

The “Don’t Tread on Me” Revolutionary War-era flag was prominent at a number of the Tea Party rallies (including the one in Appleton, Wisconsin, where The New AmericAN is located), as were signs to end the Federal Reserve.

The event generally credited with inspiring the Tea Party move-ment was a February 19, 2009 broadcast from the floor of the Chicago Mercantile Exchange by CNBC financial commentator Rick Santelli. During his broadcast, Santelli criticized the Obama administration’s plan to use federal funds to refinance troubled mortgages as “promoting bad behavior,” and he suggested the idea of staging a “Chicago Tea Party.” Almost immediately after-wards, websites began to spring up promoting the idea and a new movement began. The clip of Santelli’s impassioned outburst has been viewed on YouTube more than a million times.

An excellent coordinated effort was provided to event organiz-ers through websites created by sponsoring organizations such as TaxDayTeaParty.com, the American Family Association, Top Conservatives on Twitter (TCOT), Smart Girl Politics, and the DontGo Movement. The new Glenn Beck 9-12 Project has also promoted the Tax Day Tea Parties on its website. Yet once the movement took off, local events were more-or-less spontane-

ous, with many finding out about and promoting various events through the Internet and social networking.

Newt Gingrich, who addressed a Tea Party rally in New York City, was the most prominent big-name neoconservative politi-cian who was heavily involved in promoting the April 15 events. The participation of establishment GOP politicians like Gingrich in a movement that’s also populated by Ron Paul Republicans suggests that they view the movement as an opportunity to posi-tion themselves as anti-big government, garner support, and (in general) further their political ambitions. It does not mean that they are suddenly willing to abandon their neoconservatism in favor of strict adherence to the Constitution.

Veteran readers of The New AmericAN know about Gingrich’s key role in placing the United States under the jurisdiction of the World Trade Organization and NAFTA, among other inter-nationalist positions he has taken. However, the vast majority of Americans who attended the Tax Day Tea Parties were undoubt-edly entirely innocent of such knowledge.

Nonetheless, the Tax Day Tea Parties provided a very welcome venue for hundreds of thousands of Americans to register their opposition to the trillion-dollar bailouts, corporate takeovers, stimulus packages, inflationary deficit spending, etc. n

Hundreds of Thousands attend Tax day Tea Parties

Inside Track


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Lansing, Michigan Olympia, Washington

Washington, D.C.

one supreme court Justice likes the idea of relying on foreign law“Why shouldn’t we look to the wisdom of a judge from abroad with at least as much ease as we would read a law review article written by a professor? I frankly don’t understand all the brou-

haha lately from Congress and even from some of my colleagues about referring to foreign law.”Speaking at a symposium held at Ohio State University, Justice Ruth Bader Ginsburg responded in part to criticism of her view given by Justices Roberts, Thomas, Scalia, and Alito.

chief Justice opposes Use of foreign law in rendering decisions“If we’re relying on a decision from a German judge about what our Constitution means, no president accountable to the people appointed that judge and no Senate accountable to the people confirmed that judge. And yet he’s playing a role in shaping the law that binds the people in this country.”Having taken this position during his confirmation hearing, Chief Jus-tice John Roberts has never backed away from his belief that foreign law should not be relied upon in issuing decisions.

clever labeling Hides What something really is“There’s a great company called I Can’t Believe It’s Not Butter. At least they have the decency to tell you it’s not butter. Now we have something called ‘credit default swaps,’ because if they called it I Can’t Believe It’s Not Insurance, maybe nobody would buy it.”Congressman Gary Ackerman (D-N.Y.) made his point during hearings with financial regulators.

scoffing at the reputed Worth of “Public opinion”“Public opinion may be defined as what people think other people are thinking.”In his inimitable way, columnist Joseph Sobran places little value on oft-cited public opinion.

Bonuses for fannie and freddie Employees angers iowa senator“It’s an insult that these bonuses were made with an infusion of cash from the taxpayers. It’s hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year.”Hoping to retain many employees, the quasi-government companies known as Fannie and Freddie are awarding 7,600 of their personnel with more than $210 million in bonuses after receiving a $15 billion bailout from the government. Senator Charles Grassley (R-Iowa) notes that four of the top executives of these firms will each receive at least $1 million in hopes of retaining them.

Treasury secretary Not Evasive about Taking over Banks“If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes. Where that requires a change in management and the board, then we will do that.”Interviewed on television, Secretary of the Treasury Timothy Geithner cited the government’s action that has provided bail-outs while forcing out the top executives of AIG, Fannie Mae, and Freddie Mac. He obviously does not believe that failing entities should be allowed to fail.

Professor Protests obama Presence at Notre dame commencement“The invitation to Mr. Obama is a deliberate thumbing of the collective nose at the Roman Catholic Church.”Philosophy professor Ralph McInerny, one of the more prominent instructors at Notre Dame, believes the school’s invitation to the president to deliver the commencement address and receive an honorary degree should be rescinded. n

— comPiled by JohN F. mcmANus

John Roberts

Timothy Geithner

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QuickQuotes

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Ruth Ginsburg

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by James Perloff

The New AmericAN has devoted extensive coverage to the risks of what critics have dubbed a North

American Union (NAU), in reference to the incremental integration of the Unit-

ed States with Mexico and Canada. The foundation for such a union was initi-ated with the North American Free Trade Agreement, or NAFTA, which went into effect on January 1, 1994. Like the older European Common Market that eventu-ally morphed into the EU, NAFTA, a sup-posed “free trade” arrangement, provided the supranational architecture for future integration.

This process of North American integra-tion was later advanced through the “Se-

curity and Prosperity Partnership” (SPP) that President George W. Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin launched at their Waco, Texas, meeting on March 23, 2005.*

Few Americans are aware of the SPP

* For background, see our special October 15, 2007

“Merger in the Making” issue. The issue is avail-

able online as a PDF: http://www.thenewamerican

.com/files/MergerInTheMaking.pdf

James Perloff is the author of The Shadows of Power:

The Council on Foreign Relations and the American

Decline and Tornado in a Junkyard: The Relentless

Myth of Darwinism.

THE NEW AMERICAN • MAy 11, 200910

TransaTlanTic Union

It is now clear that European nations were deceived into joining an economic union that became a political union, yet our leaders still seek a similar economic union with the EU.

UNIONUnattractive

arrangement because the major media ig-nored it — except for CNN’s Lou Dobbs, who said of the Waco meeting: “President Bush signed a formal agreement that will end the United States as we know it, and he took the step without approval from ei-ther the U.S. Congress or the people of the United States.”

It soon became apparent that the plan would lead to eventual political consolida-tion of the countries, modeled on the Euro-pean Union. It would destroy U.S. sover-eignty, nullify the Constitution, flood our nation with cheap, job-destroying imports via a NAFTA “Super Highway,” and allow uncontrolled immigration by erasing our border with Mexico.

Thanks to the vigilance of concerned activists, the alarm bells reached the halls of Congress, and in 2007 Rep. Virgil Goode (R-Va.) introduced House Concur-rent Resolution 40, which resolved that

(1) the United States should not engage in the construction of a North American Free Trade Agreement (NAFTA) Superhighway System; [and]

(2) the United States should not allow the Security and Prosperity Partnership (SPP) to implement fur-ther regulations that would create a North American Union with Mexico and Canada.

Robert Pastor of the ultra-establishment Council on Foreign Relations (CFR) is

considered by many to have fathered the concepts that resulted in the SPP. But writing in the July/August 2008 issue of Foreign Affairs (the CFR’s journal), Pastor registered disappointment with its prog-ress. Though continuing to advocate conti-nental unification, he lamented that “North America’s experiment in integration has stalled.... The April summit meeting [be-tween U.S., Mexican, and Canadian heads of state] was probably the last hurrah for the SPP. The strategy of acting on techni-cal issues in an incremental, bureaucratic way, and of keeping the issues away from public view, has generated more suspicion than accomplishments. The new president will probably discard the SPP.”

But like a running back who, about to be tackled, laterals the football to a team-mate, the establishment has at least for the time being shifted to another scheme: ce-menting the United States to the European Union in what is called the “Transatlantic Partnership.”

Early rumblings of this partnership came in 2003 when the U.S. Department of Commerce stated in a press release: “Commerce Secretary Don Evans and his European Union coun-terpart, Commissioner Erkki Liikanen, reaffirmed the im-portance of the transatlantic economic and commercial partnership at a meeting last night in Washington, D.C.”

These sentiments were quietly certified in November of that year when the U.S. House of Representatives passed House Resolution 390, introduced by Nebraska Republican Doug Bereuter. The resolution declared that the “United States and the European community are aware of their shared responsibility, not only to further transatlantic security, but to address other common interests such as environmental protection, poverty reduction, combating international crime and promoting human rights, and to work together to meet those transnational challenges which affect the well-being of all.” It further stated that “the partnership should be expanded pro-gressively from a transatlantic community of values to an effective transatlantic com-munity of action.”

On the other side of the ocean, the Euro-pean Parliament passed resolutions in May 2004 and January 2005 advocating the es-tablishment of a “transatlantic market.”

These intentions became actuated at a

At a summit on April 30, 2007, President Bush announced the signing of a new agreement whose expressed purpose is to “strengthen transatlantic economic integration.” Without the consent of Congress or a mandate from the American people, this was an unconstitutional act.

11www.TheNewAmerican.com

coming together: In 2008, the leaders of Mexico, the United States, and Canada (Felipe Calderon, George W. Bush, and Stephen Harper) met to further empower the Security and Prosperity Partnership of North America (SPP). The SPP builds on the North American Free Trade Agreement to integrate the three countries’ military and security functions, populations, and laws — similar to the EU.

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White House summit on April 30, 2007. Standing beside Angela Merkel, president of the European Council, and José Manuel Barroso, president of the European Com-mission, President Bush announced the signing of a new agreement whose ex-pressed purpose is to “strengthen transat-lantic economic integration.” Specifically, the pact called for “joint work in the areas of regulatory cooperation, financial mar-kets, trade and transport security, innova-tion and technological development, intel-lectual property rights, energy, investment, competition, services, and government procurement,” as well as the “interopera-bility of electronic health record systems,” “customs cooperation,” and other steps to-ward economic integration.

The PatternSome may ask: “What is wrong with eco-nomic integration? What’s the big deal about cooperation? Isn’t it xenophobic paranoia to oppose it?”

Entirely aside from the fact that Presi-dent Bush’s committing the United States to this arrangement with the EU, without the consent of Congress or a mandate from the American people, was an uncon-stitutional act, one must understand the background that has led to this develop-ment, which is only the latest in a series of events.

The governments of Europe and the United States are dominated by an “estab-lishment” that intertwines multinational corporations, think tanks, central banks, powerful foundations, and the major mass media. In the United States, the Council on Foreign Relations is the establishment’s chief bridge of influence to the federal government, having dominated the cabi-nets of every president since Franklin D. Roosevelt. The CFR has counterpart or-ganizations in countries throughout the world. Coordination of policy between establishment figures from different coun-tries has taken place through such venues

as the annual Bildergberger con-ferences, begun in 1954, and the meetings of the Trilateral Com-mission, founded in 1973 by Zbigniew Brzezinski and CFR Chairman David Rockefeller. The goal of the CFR and its sister or-ganizations is world government; in fact, the CFR was founded for that express purpose in 1921 after the U.S. Senate failed to ratify the Versailles Treaty, which would have committed us to joining a ru-

dimentary world government in the form of the now-defunct League of Nations.

World government is the pathway to tyranny because, by eliminating the sov-ereignty of nations, it would concentrate all of the world’s political power in a single regime — a frightening concept to contemplate.

Because nation-states have tradition-ally, and rightfully, been suspicious of ceding themselves to a world government, the establishment has adopted the tac-tic of grouping countries under regional governments as a steppingstone to global dominion. A Frenchman or German, in other words, might feel more comfortable merged in a European federation than one that included Asia or Africa.

Soviet dictator Joseph Sta lin understood this strategy well. He said: “Populations will more readily abandon their national loyalties to a vague regional loyalty than they will for a world authority. Later, the regionals can be brought all the way into a single world dictatorship.”

In a modern context, Zbigniew Brzezinski said: “We cannot leap into world government in one quick step. The precon-dition for genuine globalization is progres-sive regionalization.” Both the European Union and the incipient North American Union are, of course, regional bodies.

However, many nations have been re-luctant even to join regional organizations. The bait used to lure them in has been the alleged prosperity of trade treaties. These, while initially disguised as economic ar-

The push for the Transatlantic Partnership is a well-coordinated one. At the hub of this movement is a powerful but largely unpublicized institution called the Transatlantic Policy Network (TPN), headquartered in Washington and Brussels.

Progression of the plan: Former President George W. Bush went to a G20 Summit on Financial Markets and the World Economy in 2008. Obama was at another G20 financial summit in April. Both presidents were in favor of a new global financial system. The meeting Obama attended ended with a tentative agreement to initiate such a system.A

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rangements, cast the die for inevitable po-litical consolidation.

The European Union is a case in point. The EU actually started in 1950 as the six-nation European Coal and Steel Commu-nity. In 1957, this evolved into the Com-mon Market, which was sold to Europeans as a purely economic structure that would enhance prosperity; its official name was the European Economic Community.

The chief architect of the Common Market was the shadowy Jean Monnet, whom Time magazine called “the Father of Europe.” Monnet’s deceptive strategy was explained by British Conservative Adrian Hilton, who notes that Monnet believed

that Europe should become a federal superstate, into which all ancient nations would be fused. ‘Fused’ is the word he used.... For this to be achieved without the peoples of Eu-rope realising what was happening, the plan was to be accomplished in successive steps. Each was to be dis-guised as having an economic pur-pose, but all, taken together, would inevitably and irreversibly lead to federation.

Once nations agree to complex trade agreements, conflicts naturally arise over issues such as prices, tariffs, taxation, product safety, union relations, etc. Reso-lution of these conflicts requires coordi-

nated changes in laws. In Europe, laws are usually made by parliaments; thus the Common Market led to the formation of the European Parliament in 1979, and the European Economic Community simply dropped the word “Economic” — which had only been a pretense — from its name. Then came the European Union, in which sovereignties have been drowned: national parliaments find themselves in-creasingly subservient to the dictates of the EU, as they see their laws, currencies, court systems, militaries, etc., gradually consolidated.

The plans for a North American Union likewise got their start with an economic arrangement: NAFTA. Although hyped as a path to “prosperity,” Americans lost mil-lions of jobs as cheap imports flooded the country. And our trade deficit soared: in 1994 (the year we joined NAFTA) it was $75 billion; in 2008 $673 billion. Our trade deficit with Canada and Mexico went from $9 billion in 1993 to $98 billion by 2003.

But adding constitutional insult to this injury, NAFTA’s foremost purpose was to lay the groundwork for consolidation. An-drew Reding of the World Policy Institute wrote: “NAFTA will signal the formation, however tentatively, of a new political unit — North America. With economic integra-tion will come political integration. By whatever name, this is an incipient form of international government. Following the lead of the Europeans, North Ameri-

cans should begin considering formation of a continental parliament.” (Emphasis added.)

This view was echoed by University of Nevada economics professor Glen Atkin-son in his paper “Regional Integration in the Emerging Global Economy: The Case of NAFTA,” published in the Social Sci-ence Journal. He wrote, “The stage of economic union requires a high degree of coordination or even unification of poli-cies. This sets the foundation for political union.” (Emphasis added.)

Bridging the oceanThus no one should be surprised that the latest thrust toward world government — the Transatlantic Partnership — is initially being foisted on us as an “economic ar-rangement” (coupled, as was the Security and Prosperity Partnership, with assur-ances that consolidation will also provide protection against terrorism).

As we have noted, President Bush’s signed agreement with the EU’s leaders pledged “transatlantic economic integra-tion.” It established a permanent Trans-atlantic Economic Council. And most of the agreement’s provisions — concerning trade, investment, energy, etc. — are eco-nomic in nature.

Based upon the pattern set by the Eu-ropean Union and the SPP, however, it is quite logical to conclude that this eco-nomic consolidation is only a prelude to intended merger with the EU.

Just 12 days before President Bush signed the agreement, British Prime Min-ister Gordon Brown delivered a speech at the John F. Kennedy Presidential Library and Museum in Boston. Ironically, as he stood only 12 miles from where the first shots of the American Revolution were fired, the Briton invoked this quote from John F. Kennedy: “Today, Americans must learn to think intercontinentally.” Continuing, he gushed that “a global so-ciety demands new global agreements and

integration by 2015: The EU’s members of parliament voted in March to initiate a new Transatlantic Policy Council “for systemic high-level consultation and coordination in respect of foreign and security policy” with the United States. Its goal is to achieve “economic integration” and a “unified transatlantic market by 2015.”E

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strengthened global institutions to protect and safeguard essential global resources.” Phyllis Schlafly counted the word “glob-al” 69 times in Brown’s speech. Clearly, he was softening the American public for President Bush’s transatlantic agreement.

Indeed, the push for the Transatlantic Partnership is a well-coordinated one. At the hub of this movement is a powerful but largely unpublicized institution called the Transatlantic Policy Network (TPN), head-quartered in Washington and Brussels.

In February 2007, just two months be-fore the U.S.-EU Summit, TPN published its white paper Completing the Transat-lantic Market, which declared: “It is time for a complementary, top down approach to transatlantic cooperation through a joint commitment by the European Union and the United States to a roadmap for achiev-ing a Transatlantic Market by 2015.”

As Dennis Behreandt insightfully noted in the May 12, 2008 issue of The New AmericAN:

The emphasis placed on “top down” is not insignificant. As typically used by NGOs, that terminology usually implies that executive-level leaders will impose their desires on the citi-zens of a nation, not the other way around as envisioned, for instance, by America’s Founders.

Indeed, TPN’s website (www.tpnonline.org) lists as its business members a host of multinational corporations, such as AIG, Citigroup, Time Warner, IBM, Merck, GE, and Coca-Cola. Peter Sutherland, the EU honorary president of TPN, is chairman of both Goldman Sachs International and the British Petroleum Company, as well

as former director of the sov-ereignty-sapping World Trade Organization.

Among the “Cooperating Institutions” listed by TPN are what we might call a round-up of “the usual suspects” who ad-vocate world government over national sovereignty, such as: the Council on Foreign Rela-tions (CFR); RIIA (the CFR’s British counterpart); the Ger-man Council on Foreign Re-

lations; the Center for Strategic and In-ternational Studies (CSIS); the Atlantic Council; the Aspen Institute; the Carnegie Endowment for International Peace; and the German Marshall Fund of the United States. The CFR’s role in advocating re-gional alliances and world government is well known to many readers of The New AmericAN. It is interesting to note the statements being made by others listed among the “Cooperating Institutions” that demonstrate they are moving lock step with TPN.

For example, CSIS, which counts among its members such CFR heavyweights as Zbigniew Brzezinski, Felix Rohatyn, Har-old Brown, and Brent Scowcroft, released a report in 2007 called “Towards a Grand Strategy for an Uncertain World: Renew-ing Transatlantic Partnership.” It said that “our long-term vision is for a zone of common security and collective action from Finland to Alaska.”

In 2009, in its journal Internationale Politik, the German Council on Foreign Relations published an article by Paul Hockenos entitled “Rethinking US-Eu-rope Relations.” It declared: “It must be a partnership of equals across the Atlan-tic and this will require real compromis-es from the United States as well as the Europeans.”

In 2007, the U.S.-based Atlantic Council issued a 35-page report entitled Transatlan-tic Leadership for a New Global Economy, which advocated a “barrier-free ‘Enhanced Transatlantic Market.’” Among its many specific recommendations: “The United States and the EU should launch a new, jointly funded effort to develop future en-ergy technologies that will both improve efficiency and reduce global warming, as part of the development of a new, post-Kyoto international consensus.” It calls for transformation of the International Energy Agency (IEA) into “the primary institution for global energy governance,” and a merg-er of the World Bank with the IMF. In short, it wants broad consolidation of power.

The Atlantic Council is an old hand at the transatlantic game. Officially founded in 1961, it grew largely out of the older At-lantic Union Committee, whose members envisioned a U.S.-Europe merger which they dubbed “Atlantica.” In the 1960s, the council’s lobbying resulted in resolutions being brought before Congress that would

The once-powerful nations of Europe are progressively finding themselves reduced to the status of mere provinces of the EU. Should America unite with the EU, we can expect to follow suit, finding our Constitution scrapped and ourselves little more than a colony of Europe.

global cheerleader: U.K. Prime Minister Gordon Brown has been jetting around the world in a bid to convince countries to institute world regulations over financial institutions and functions. The new regulations would be under the control of a global governing body.A

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have laid the groundwork for this merger. The resolutions were consistently rejected by Congress, but with the further wither-ing of national sovereignty, the council ap-pears ready to renew its merger crusade.

Events Propel the Union forwardNeither the advent of Barack Obama nor the current financial debacle will slow the Transatlantic Partnership, but can be ex-pected to accelerate it. During his presi-dential campaign, Obama named globalist Zbigniew Brzezinski as one of his top for-eign policy advisers, calling him “some-body I have learned an immense amount from.”

Following the elections, Nicolas Sarkozy, president of both France and the European Council, said that “the European Union sees in this election the promise of a reinforced transatlantic partnership.”

In the Spring 2009 issue of Internation-ale Politik, the German Council on Foreign Relations published an article called “A New Transatlantic Partnership” that actu-ally complained of “the bruises that the transatlantic partnership suffered during the Bush years” and opined that “if Europeans could have voted in the 2008 US presiden-tial election, they would have voted over-whelmingly for Barack Obama.”

Indeed, in April of this year — just a little more than two months after his inau-guration — Obama traveled to Europe for a series of summit meetings with EU lead-ers. Canada is now joining the Transatlan-tic Partnership. Canada’s daily Financial Post reported on March 5, 2009:

Canada and the European Union have agreed to begin free trade ne-gotiations.... After months of “scop-ing exercises,” the two parties have come to an agreement on the areas they would like to negotiate, includ-ing trade in goods, services and in-vestment, and have now adjourned to prepare their proposals to take to the negotiating table.... “At long last, Canada is poised to realize the immense potential of a closer trans-atlantic relationship,” said Thomas d’Aquino, president of the Canadian Council of Chief Executives.

The financial meltdown is being used as a stick to force us eat the “carrot” of

the Transatlantic Partnership. The Brus-sels Forum — yet another internationalist tentacle of the transatlantic network — recently declared: “Since the beginning of the financial crisis in the fall of 2008, the world economy has deteriorated at an alarming rate.... The U.S. and European governments must reassess the role of the transatlantic partnership in the global economy and re-ignite it as the catalyst of global economic recovery.”

In the United States, Henry Kissinger has long epitomized the foreign policy es-tablishment. He once told Hamilton Fish Armstrong, editor of the CFR journal For-eign Affairs, “You invented me,” and be-fore serving as Richard Nixon’s Secretary of State, he acted as chief foreign policy adviser to Nelson Rockefeller, whom he called “the single most influential person in my life.”

Still a dominant voice in foreign policy, Kissinger published an article in the Janu-ary 12, 2009 issue of the International Herald Tribune entitled “The Chance for a New World Order.” He stated:

As the new U.S. administration pre-pares to take office amid grave finan-cial and international crises, it may seem counterintuitive to argue that the very unsettled nature of the interna-tional system generates a unique op-portunity for creative diplomacy....

Even the most affluent countries will confront shrinking resources. Each will have to redefine its national priorities. An international order will emerge if a system of compatible pri-orities comes into being....

The alternative to a new interna-tional order is chaos.

The coordinated voices of many global elites, speaking through mass media or-gans owned by the international establish-ment, give the public an illusion that there is a logical consensus for world govern-ment, with the Transatlantic Partnership as its newest cornerstone.

However, like NAFTA and the Europe-an Union itself, there has never been any mandate from the people of the nations for these globalist arrangements.

Experience has proven that if America moves ahead with the Transatlantic Part-nership, the economic alliance will be converted incrementally into a political merger. The once-powerful nations of Eu-rope are progressively finding themselves reduced to the status of mere provinces of the European Union. Should America unite with the EU, we can expect to fol-low suit, find our Constitution scrapped for international regulation, and ourselves — after over 200 years of the blessings of independence — little more than a colony of Europe. n

His mandate: Zbigniew Brzezinski cofounded the Trilateral Commission with David Rockefeller. The commission is dedicated to achieving global stability through coordinated policies amongst developed nations. The commission is regularly accused of undermining individuals’ rights and freedoms to gain unanimity among the world’s governments.

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by Warren Mass

The term “cap and trade,” in terms of a plan to reduce carbon-dioxide emissions into the air, is one that

is heard widely of late as a proposed solu-tion for the supposed problem of global warming. It will be discussed with more frequency as cap-and-trade proposals that failed to pass in the last Congress are re-introduced this year. But many people are still a little hazy about what “cap and trade” actually means. One succinct ex-planation appeared in an article on the Congressional Budget Office website: “The government would set gradually tightening limits on [CO2] emissions, issue rights (or allowances) correspond-

ing to those limits, and then allow firms to trade the allowances.”

Aside from telling us how cap-and-trade programs might operate, the reference to “tightening limits on emissions” gives away the ostensible purpose of these programs: to fight that supposed ominous scourge of the 21st century, global warming.

Those who have accepted the widely promulgated theory that the melting of the polar icecaps and rising of the seas is im-minent may believe that any economic cost is worth enduring, if only global warm-ing can be forestalled. However, regular readers of The New AmericAN, especially those who have read our February 16, 2009 cover story entitled “Whatever Happened to Global Warming?” as well as those who

have read any of several well-researched books* disputing both the severity of glob-al warming and the theory that it is caused by man’s activities, will not easily accept the argument that a massive and costly government program is needed to prevent a catastrophic ecological event.

To make an informed decision about whether a cap-and-trade program is advis-able, therefore, requires that several ques-tions be answered.

Is global warming real, or at least real enough to be threatening?This question is best dealt with by refer-ring to our February 16 cover story or one

Cap-and-trade programs to control carbon-dioxide emissions are an unacceptably costly way to deal with the supposed problem of man-made global warming.

The High Cost of cap and Trade

* See, for example, Hot Talk, Cold Science, and Un-

stoppable Global Warming Every 1500 Years, by

Dr. S. Fred Singer; The Politically Incorrect Guide

to Global Warming (and Environmentalism) and

Red Hot Lies: How Global Warming Alarmists Use

Threats, Fraud, and Deception to Keep You Misin-

formed by Christopher C. Horner; and Meltdown,

by Patrick Michaels.

futile cause? These protestors participating in a walk in South Burlington, Vermont, in 2006 want humans to “Stop Global Warming.” What they may not have considered is that variations in the Earth’s temperatures are a natural — not a man-made — phenomenon.

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of the books cited in the footnote. Suffice it to say that the issue is not as settled as many in the media portray it to be.

What impact, if any, do man-made CO2 emissions have on global warming?In the April 3 issue of the Wall Street Jour-nal, deputy editor George Melloan noted that, according to “serious scientists,” “the greenhouse gases are a fundamental part of the biosphere, necessary to all life, and … industrial activity generates less than 5% of them, if that.”

Furthermore, the theory that CO2 is the prime culprit in so-called global warming may also be flawed. In the compendium Earth Report 2000, Dr. Roy Spencer, se-nior scientist for climate studies at NASA’s Marshall Space Flight Center, noted: “It is estimated that water vapor accounts for

about 95 percent of the earth’s natural greenhouse effect, whereas carbon dioxide con-tributes most of the remaining 5 percent. Global warming projections assume that water vapor will increase along with any warming resulting from the increases in carbon diox-ide concentrations.”

Dr. Spencer points out that such assumptions are unproven, noting that “there

remain substantial uncertainties in our understanding of how the climate system will respond to increasing concentrations of carbon dioxide and other greenhouse gases.” He observes that the natural greenhouse effect that heats the Earth is offset by natural cooling processes. “In other words,” concluded Dr. Spencer, “the natural greenhouse effect cannot be considered in isolation as a process warming the earth, without at the same time accounting for cooling processes that actually keep the greenhouse effect from scorching us all.”

Theories on runaway global warming based on CO2 emissions postulate that increases in CO2 will cause some (minor) heating of the Earth that will in turn cause more water vapor to enter the air from the oceans, thereby causing dangerous heating

of the Earth. But the system isn’t so simple. If the climate system worked this way, the Earth would have reached its maximum temperature eons ago, and stayed there: water vapor would have entered the air when the oceans were heated by sunlight; the Earth would have warmed somewhat, leading to more water vapor entering the air and more heating of the Earth, followed by more water vapor, and so on.

What is the economic cost of reducing carbon-dioxide emissions, either by cap and trade or a direct tax?Whether one accepts the claims that carbon emissions contribute to global warming, or prefers to give equal weight to contradic-tory evidence, there is no dispute that a cap-and-trade program would be costly. As to how costly, we should consider the article “Study the (scary) figures on cap and trade,” by Rep. Joe Barton (R-Texas) in the Fort Worth Star Telegram for April 11, 2009. In it Barton noted: “[Cap and trade] is being sold as a way to save the planet by taxing ‘emitters,’ but it will kill the economy and decimate your family’s budget.”

Barton made the following predictions of how cap and trade would affect the U.S. economy, citing the National Association of Manufacturers as his principal source:

• Job losses: 1.8 to 7 million• Family tax increase: $739 to $6,752• Electricity cost increases: 44 to 129

percent• Gasoline price increases: 61 cents to

$2.53 per gallon• Natural gas increases: 108 to 146

percentHe added: “While the exact cost in-

creases may be debatable, experts — in-cluding those working at the White House — agree that prices will go up.”

The Huntsville, Alabama, Times for

David Sawyer of the Alabama Policy Institute warned that a cap-and-trade system could more than double electricity and natural gas bills for residents. Sawyer noted that putting “a chokehold on our economy with the idea of saving the planet is a complete ruse.”

sen. John Warner (R-Va.), left, accompanied by Sen. Joseph Lieberman (I-Conn.), center, and Sen. Barbara Boxer (D-Calif.), right, during a 2008 news conference on Capitol Hill to discuss the environment and climate change. When Lieberman and Warner introduced the America’s Climate Security Act of 2007 (S. 2191) in the last Congress, the Heritage Foundation warned: “All such climate change measures warrant careful scrutiny, as they would likely increase energy costs and do considerably more economic harm than environmental good.”A

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April 14, 2009 ran an article headlined “Cap-and-trade will hurt economy, group says,” that quoted Dr. John Hill, director of research for the Birmingham-based Al-abama Policy Institute (API). Dr. Hill cast doubt on the idea that carbon emissions have much impact on global warming.

The article noted that, regardless of differences of opinion concerning global warming: “All sides agree that carbon di-oxide limits could raise the cost of elec-tricity or heat generated using fossil fuels such as coal or natural gas. It also could raise costs for other industries that release carbon dioxide, such as cement plants.”

The report also quoted API’s commu-nications director, David Sawyer, who warned that a cap-and-trade system could more than double electricity and natural-gas bills for residents. “Since when was carbon dioxide considered a poisonous pollutant?” Sawyer questioned. “To put a chokehold on our economy with the idea of saving the planet is a complete ruse.”

And finally, does the benefit justify the cost?When Senators Joseph Lieberman (I-Conn.) and John Warner (R-Va.) intro-duced the America’s Climate Security Act of 2007 (S. 2191) in the last Congress, the Heritage Foundation warned, “All such climate change measures warrant careful

scrutiny, as they would likely increase en-ergy costs and do considerably more eco-nomic harm than environmental good.”

The Heritage assessment cited a study by Charles River Associates that put the cost (in terms of reduced household spend-ing per year) of S. 2191 at $800 to $1,300 per household by 2015, rising to $1,500 to $2,500 by 2050. Electricity prices could jump by 36 to 65 percent by 2015 and 80 to 125 percent by 2050. The study noted that while no analysis has been done on the impact of S. 2191 on gasoline prices, an Environmental Protection Agency study of a less stringent cap-and-trade bill estimates impacts of 26 cents per gallon by 2030 and 68 cents by 2050.

And what benefit would ensue from these financial burdens? Again citing the Charles River study, Heritage noted that “even if the U.S. were a party to [the Kyoto Protocol] and the European nations and other signatories were in full compliance … the treaty would reduce the Earth’s fu-ture temperature by an estimated 0.07 de-grees Celsius by 2050 — an amount too small even to verify. S. 2191 would at best do only a little more.”

Despite the above findings, there is a strong political movement in our nation determined to impose cap and trade or other forms of carbon taxes that will place a further economic burden on Americans.

House Energy and Commerce Commit-tee Chairman Henry A. Waxman (D-Calif.) and Rep. Edward J. Markey (D-Mass.), chairman of the Energy and Environment Subcommittee, released a draft climate bill in March that they hope to send to the full House by Memorial Day.

Another bill containing a cap-and-trade provision has already been introduced in the House. H.R. 1759, the Emission Mi-gration Prevention with Long-term Output Yields Act, was introduced on March 26 by representatives Jay Inslee (D-Wash.) and Michael Doyle (D-Pa.) and has been referred to the House Committee on En-ergy and Commerce.

Perhaps to address concerns voiced by opponents of cap-and-trade plans that they will damage an already weak U.S. econo-my, Joseph Aldy, a special assistant to the president for energy and the environment, announced on April 8 that a portion of the revenue received from any cap-and-trade plan must go toward relieving those who end up paying higher energy bills because of the plan — an admission against in-terest that energy costs are going to go up, just as critics claim. “There will be those who are going to be vulnerable as we make this transition and … we need to actually target the allowance value and revenues to those households, communi-ties, and businesses,” Reuters news quoted Aldy as saying at an Energy Information Administration forum.

Advocates of cap and trade are promot-ing it as a way to prevent global warming. But U.S. Representative Marsha Black-burn (R-Tenn.) has another description for it: “cap and tax.” Even New York City Mayor Michael Bloomberg admitted that cap and trade is a form of taxation when he told reporters at the UN Climate Change Conference in Bali, Indonesia, in 2007 that the growing cap-and-trade industry is vul-nerable to “special interests, corruption, inefficiencies,” and should be replaced by straight carbon taxes.

It makes little sense to impose a higher tax burden and another revenue-sharing scheme on Americans already beaten down by the current recession, using the prevention of “global warming” as a pre-text. Americans who think that the cost of living is already high enough should share their concerns with their representatives in Congress before it is too late. n


rep. Joe Barton (R-Texas), ranking Republican on the House Energy and Commerce Subcommittee, said that cap and trade “is being sold as a way to save the planet by taxing ‘emitters,’ but it will kill the economy and decimate your family’s budget.”

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by Alex Newman

While government continues to grow by leaps and bounds, the private sector is being

squeezed. Much-needed capital for in-vestments is being spent on government projects while businesses and individuals are starved for credit. Government is hir-ing — either directly, or indirectly through government-backed “stimulus” projects — while on the whole companies across the nation shed jobs. The people are being taxed more heavily to support this growth, either directly or through inflation to fi-nance government borrowing, and until there’s a policy change, it’s only going to get worse. This has been the trend for dec-ades, but is accelerating at alarming levels under President Barack Obama.

Government jobs are on the rise. A re-cent study by the Heritage Foundation es-timates that around a quarter of a million

new federal government workers will be needed just to spend the massive new bud-get. White House Budget Director Peter Orszag explained that it was too early to make assumptions about federal employ-ment levels, but noted that “investing in skilled professionals will not only pay off over time but also immediately deliver bet-ter service to taxpayers.”

A March 2 Washington Post article quotes officials at the Department of Vet-erans Affairs saying that department plans to hire 17,000 new employees. Accord-ing to an anonymous official at the EPA quoted in the same article, that agency too will be expanding. A 2007 report by the Partnership for Public Service estimated that the Defense and Homeland Security Departments would need an additional 83,000 workers over a two-year period. Even before becoming president, Obama promised to add 65,000 troops to the Army and 27,000 Marines.

According to a March 7 Bloomberg article, federal, state and local govern-

ment payrolls increased by 40,000 just in January and February. The private sector lost well over a million jobs during the same period. The Bureau of Labor Statis-tics reports that in 2008 there were over 150,000 jobs added in government at all levels, while the private sector lost close to four million. Almost 100,000 people were hired by the federal government in fiscal year 2007, according to the Office of Per-sonnel Management.

Uncle sam the Biggest EmployerWhile state and local governments employ over 20 million people already, the federal government has become the largest single employer in the country with almost three million employees (not including contrac-tors and military personnel). For compari-son, after the New Deal from 1933 to 1939 there were about 700,000. Meanwhile the private sector is being ruined. Work weeks averaged a mere 33.3 hours in February, according to a Bloomberg article about surging unemployment. Overtime has Alex Newman is a freelance writer living in Florida.

Thousands of unemployed wait in line for buses to a job fair in Manchester, New Hampshire, on April 9. More than five million people have lost their jobs since the recession officially began, and with the government growing at an unprecedented rate, the numbers are only likely to increase.

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While every other major component of the economy is shrinking, government at all levels has grown to consume nearly half of America’s gross domestic product.

Cancerous Growthof government


Economy

also shrunk. Payrolls are being slashed. After losing 651,000 jobs in February and another 663,000 jobs in March, the official unemployment rate now stands at 8.5 percent, according to the Bureau of Labor Statistics. The official number of unemployed Americans is now up to 13.2 million, according to the BLS. Another measure of unemployment that includes the underemployed and people who have given up looking for work jumped to al-most 15 percent, the highest figure since this measure has been tracked.

For the first time since 1939, when the data started being collected, more than 600,000 jobs have been lost every month for three consecutive months. Adding in March makes it four, and the numbers are only getting worse. The U.S. economy has

hemorrhaged over five million jobs since the recession officially began in December 2007. In the last quarter of 2008, the econo-my shrank at an annual rate of 6.2 percent. And most forecast-ers aren’t predicting a recovery anytime soon, if it ever arrives. Every “major component” of the economy shrank last year — ex-cept, of course, government.

Several other fields dominated by government are forecasted to

expand, even in the midst of an economic downturn. A CNN article from last year cites the “environmental industry” as an-other key growth area in the labor market. According to a United Nations report, this “industry” added 5.3 million jobs in 2005. With admitted socialist Carol Browner serving as President Obama’s “global warming” czar, expect companies like APX (Browner was on its board of direc-tors before her new government job) that deal in carbon credits and related fields to expand even more. While not directly em-ployed by the government, many of these “environmental” workers depend on gov-ernment regulations for business. More-over, the $787 billion American Recovery and Reinvestment Act provides billions of dollars for “green” projects, as well as

for other sectors of the economy such as education.

Of course, the growth of government means private hiring will continue down-ward. The money the government siphons out of the economy to “create” jobs in gov-ernment-favored segments of the private sector will cause job losses elsewhere.

With increasing amounts of wealth taken from the productive economy to pay for government expansion, less will be available for investments and private consumption. This means smaller busi-nesses with fewer workers providing fewer goods and services. And contrary to President Obama’s inaccurate assertions, government spending will not result in a net employment increase for the simple reason that government managers cannot allocate resources as efficiently as the free market. His continuous insistence on tax-ing “rich” people overlooks another cru-cial point; many of them are employers who will now have less capital available to hire people with.

government Employees cost MoreIn addition to the increasing size of public payrolls, government employees cost more money than people in the private sector. According to the Bureau of Labor Statis-tics, the average state or local government employee made $25,000 more than the average private-sector worker in 2006. The difference in 2000 was only slightly more than $7,500. In addition, civil ser-vants earn on average $5 more per hour in benefits than private employees do. Of course, it can be argued that this is not an apples-to-apples comparison because of the large number of people in the private sector who flip burgers and are paid ac-cordingly. Such jobs would skew overall private-sector pay downward compared to overall government-sector pay. However, the trend toward low-paying service-sector jobs is itself a product of the burden of big government on the private economy and

With increasing amounts of wealth taken from the productive economy to pay for government expansion, less will be available for investments and private consumption. This means smaller businesses with fewer workers providing fewer goods and services.

White House Budget director Peter Orszag testifies before the Senate Budget Committee on March 10 trying to justify the enormous sums of money Obama is requesting. Government spending will continue to smother the private sector, and under the current administration, the problems seem to be getting worse.

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helps explain why the disparity between pay for private- and public-sector jobs has grown.

The cost of public employees is about to sky-rocket as well, in part owing to poor planning by public retirement plans. Most government employees have what’s known as a defined benefit plan, mean-ing they will receive a guaranteed sum in perpetuity (usually including cost-of-living adjustments to keep up with infla-tion). And very few of their plans are fully funded, especially now that baby boomers are preparing to retire. Economist William Hussar of the National Center for Educa-tion Statistics predicts that over the next eight years there will be a need to recruit 2.8 million new teachers because of re-tiring baby boomers, a growing student population, and high staff turnover. There are currently 3.2 million teachers.

Most private-sector workers, on the other hand, have a defined contribution plan, which means they contribute a cer-tain amount of their salary towards their retirement but receive benefits based on how well the invested fund performs. An estimate by the National Bureau of Eco-nomic Research claims pension promises made just by state governments will total about $8 trillion in 15 years. “The taxes needed to pay for these promises would push many of these states’ economies into a death spiral,” Chicago bankruptcy lawyer James Spiotto told USA Today. The 2007 article, entitled “Pension Gap Divides Public and Private Workers,” esti-mates just the unfunded portion of federal employee benefits at $4.7 trillion.

But while public plans remain stable and entrenched, pensions in the pri-vate sector have lost almost half of their value. Most government retirement plans have too, but taxpayers will be expected to make up the difference. Boston Col-lege’s Center for Retirement Research estimates that in just the last year, state pension funds have lost over $865 billion, about 40 percent of their value. Taxpay-ers can expect to feel the squeeze as baby boomers begin to retire from civil service jobs, meaning even more money will be siphoned out of the productive economy by government.

The federal government has several op-tions to meet their obligations, none of which will be good for the private sector. Since cutting spending or re-negotiating the benefits already promised are probably out of the question, these options include raising taxes, borrowing more money, or printing up the shortfall. In the long run this will further increase the cost of gov-ernment, meaning the private sector will have to make do with less. State and local governments face similar scenarios, but since they don’t have the ability to print money, they will either have to beg the federal government for a bailout, slash spending in other areas, or take the most likely course of action: raise taxes even more.

Workers who are still employed can also expect to see a decrease in the purchas-ing power of their salaries. With the rapid increase in the money supply courtesy of the Federal Reserve’s bailouts and “liquid-ity injections,” dollars will become worth

less and less. This hidden tax has allowed the government to grow and spend more money without directly imposing new taxes. But the effects will be the same: less private capital for investment and consumption relative to govern-ment spending. Since govern-ment generally does not produce anything (it doesn’t create wealth) and more often destroys it, living standards will likely be eroded further.

Big government’s Big-time MeddlingA trend that has accelerated at breakneck speed recently is for

government to become involved in private business. Already the American taxpayer is supporting dozens of banks, A.I.G., the car companies, and others the government deems “too large to fail.” Treasury Secre-tary Timothy Geithner is now asking for the power to take over even more. Con-gressman Ron Paul has appropriately called these firms that operate at a loss “engines of wealth destruction.” Since money from productive and responsible enterprises and individuals is being poured into them, expect the economy to contract even further. And even though employees of these companies are not directly em-ployed by government, as far as taxpay-ers and the economy are concerned, they might as well be.

Even the government acknowledges that all of this government spending will adversely affect the nation’s economic future. The Congressional Budget Office estimates that Obama’s “stimulus plan” will lower U.S. Gross Domestic Product by “crowding out” private investment. “The reduction in GDP is therefore es-timated to be reflected in lower wages,” the CBO report said. “Workers will be less productive because the capital stock is smaller.”

As the private sector continues to suffer, government continues to grow. Right now the growth is being financed by inflation, borrowing, and heavy taxation. But even-tually there will come a point when taxes are too high to be sustained and foreigners are unwilling to lend the U.S. government any more money. Will everyone be forced to work for the government? n

23www.TheNewAmerican.com

Hundreds of prospective employees form a serpentine line hoping to land one of the precious few jobs still available. This job fair in Boston took place on March 23, with the number of people claiming unemployment benefits setting a record for the 9th week in a row.

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by William F. Jasper

Feeling the heat from veterans groups, pro-life organizations, con-servatives, and even Democratic

members of Congress, President Barack Obama’s Secretary for Homeland Secu-rity Janet Napolitano was forced to make a slight about-face regarding a controver-sial intelligence report issued by her de-partment. In a string of media appearances in mid-April, Secretary Napolitano half-apologized for a Department of Homeland Security (DHS) report that has drawn se-vere criticism for targeting conservative political opponents and associating them with dangerous terrorists.

The DHS document that stirred up the political firestorm is a leaked 10-page report entitled “Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment.” The most harshly criticized section of the report concerns the finger of suspicion it points at military veterans. The report, which was distributed to law-enforcement agencies nationwide, warns:

The possible passage of new restric-tions on firearms and the return of military veterans facing significant challenges reintegrating into their communities could lead to the poten-tial emergence of terrorist groups or lone wolf extremists capable of car-rying out violent attacks.

“Returning veterans,” the report continues, “possess combat skills and experience that

are attractive to rightwing extremists.” It warns that the DHS Office of Intelligence and Analysis “is concerned that rightwing extremists will attempt to recruit and radi-calize returning veterans in order to boost their violent capabilities.”

What is the basis for this DHS concern? The “Rightwing Extremism” report states: “After Operation Desert Shield/Storm in 1990-1991, some returning military vet-erans — including Timothy McVeigh — joined or associated with rightwing ex-tremist groups.”

David K. Rehbein, national commander of the 2.6 million-member American Le-gion, was understandably concerned by the DHS slur against America’s military veterans, casting them in the negative ste-reotype favored by leftists in the media and Hollywood. In a letter to Secretary Napolitano, Commander Rehbein wrote:

The American Legion is well aware and horrified at the pain inflicted during the Oklahoma City bomb-ing, but Timothy McVeigh was only

one of more than 42 million veterans who have worn this nation’s uniform during wartime. To continue to use McVeigh as an example of the stereo-typical “disgruntled military veteran” is as unfair as using Osama bin Laden as the sole example of Islam.

Rep. Bennie Thompson of Mississippi, the Democratic chairman of the House Home-land Security Committee, voiced similar concerns. In an April 14 letter to Secretary Janet Napolitano, he wrote he was “dumb-founded” by the contents of the report. “I am disappointed and surprised that the de-partment would allow this report to be dis-seminated” to law-enforcement agencies, he said. “This report appears to raise signif-icant issues involving the privacy and civil liberties of many Americans — including war veterans,” Chairman Thompson cau-tioned. “As I am certain you agree, free-dom of association and freedom of speech are guaranteed to all Americans — whether a person’s beliefs, whatever their political orientation, are ‘extremist’ or not.”

Everyone’s a ThreatObama’s Department of Homeland Security and federal-state “Fusion Centers” target millions of Americans as potential terrorists.

Janet Napolitano, Homeland Security secretary, has halfheartedly apologized for the “Rightwing Extremism” report (inset) issued by DHS.

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On April 16, Secretary Napolitano made the rounds of the morning TV shows, in an attempt to quell the growing outrage. “To the extent veterans read it as an accusa-tion … an apology is owed,” she conceded during an on-air interview on FOX News. “This was an assessment, not an accusa-tion,” Napolitano continued. “It was lim-ited to extremists — those who seek to commit violence within the United States. And all this was meant to do was to give law enforcement what we call ‘situational awareness.’”

Situational awareness? Awareness about what situation, precisely? This “in-telligence” report admits that it contains no concrete evidence. It states:

The DHS/Office of Intelligence and Analysis (I&A) has no specific in-formation that domestic rightwing terrorists are currently planning acts of violence, but rightwing extremists may be gaining new recruits by play-ing on their fears about several emer-gent issues. The economic downturn and the election of the first African American president present unique drivers for rightwing radicalization and recruitment.

Nevertheless, the DHS report claims that “lone wolves and small terrorist cells em-bracing violent rightwing extremist ideol-ogy are the most dangerous domestic ter-rorism threat in the United States.”

The report employs the word “right-wing” 50 times, and in nearly every in-stance (47 times), it is in the context of “rightwing extremism,” “rightwing ex-tremist,” “rightwing terrorist,” or “right-wing terrorist and extremist.” Tellingly, the report doesn’t bother to define any of these politically charged terms, a major derelic-tion of due diligence in such an important matter. It is similarly shoddy in using terms favored by left-wing extremists to describe their opponents on the right, such as “anti-government,” “hate-oriented,” “paranoid,” “dangerous,” and “violent.”

The closest the DHS report comes to offering a definition is this troubling description:

Rightwing extremism in the United States can be broadly divided into those groups, movements, and adher-

ents that are primarily hate-oriented (based on hatred of particular reli-gious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as op-position to abortion or immigration.

The DHS report sloppily (or, perhaps, cleverly and maliciously) demonizes mil-lions of law-abiding Americans, conflating them with violent, criminal groups such as Neo-Nazis and “white supremacists” sim-ply because they adhere to political beliefs at variance with those of the administra-tion. By repeatedly associating “right-wing,” “extremism,” “terrorism,” “vio-lence,” “threat,” “dangerous,” and “white supremacist” with those who oppose abortion, gun control, socialism, government bail-outs, and amnesty for illegal aliens, the DHS is reinforc-ing a left-wing trope aimed at criminalizing and silencing politically incorrect expres-sion and dissent.

The DHS report is doubly troubling because it comes quick on the heels of a similar federal-state law-enforcement

bulletin out of Missouri targeting conser-vatives, libertarians, gun rights advocates, pro-life activists, and others. Much of the criticism of Napolitano and the DHS re-port has failed to draw the disturbing con-nection between the DHS “Rightwing Ex-tremism” report and “The Modern Militia Movement,” a report issued in February by the Missouri Information and Analy-sis Center (MIAC), a branch of the state’s Highway Patrol. MIAC is what is known as a “fusion center,” one of 58 such fed-eral-state-local law-enforcement centers nationwide sponsored by DHS.

The MIAC report turned into an espe-cially hot potato when it became known that it specifically named political candi-dates and political parties, implying that they and their supporters should be viewed as potential terrorists, and/or threats to law enforcement. The MIAC report states:

The DHS report sloppily (or, perhaps, cleverly and maliciously) demonizes millions of law-abiding Americans, conflating them with violent, criminal groups such as Neo-Nazis simply because they adhere to political beliefs at variance with those of the administration.

Military veterans returning from fighting terrorists in Iraq, like these soldiers in the New York City Veterans Day Parade, are seen by DHS as potential “rightwing” terrorist recruits.

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You are the Enemy: The militia subscribes to an antigovernment and NWO [New World Order] mind set, which creates a threat to law enforce-ment officers. They view the military, National Guard, and law enforcement as a force that will confiscate their firearms and place them in FEMA concentration camps. [Bold empha-sis in original.]

The MIAC report then states: “Militia members most commonly associate with 3rd party political groups. It is not uncom-mon for militia members to display Con-stitutional Party, Campaign for Liberty, or Libertarian material. These members are usually supporters of former Presidential Candidate [sic]: Ron Paul, Chuck Bald-win, and Bob Barr.”

Like Secretary Napolitano, Missouri Governor Jay Nixon initially defended his agency’s report. However, as a public backlash against the report built during the last weeks of March, he reversed course. Van God-sey, the director of the fusion center that produced the report, was replaced on April 6. His superior, Department of Public Safety Director John Britt, was placed on administrative leave

pending an investigation of the report.Missouri State Rep. Jim Guest told The

New AmericAN he is especially concerned that the MIAC illustrates the growing prob-lem of increased intrusion by the federal government into state police functions. He hopes to uncover the sources of the po-liticized “intelligence” in the MIAC report and the exact nature of Missouri’s relation-ship to DHS at the MIAC fusion center.

investigate dHsMembers of Congress should be looking into this matter as well. The dangerous precedents established by the DHS and MIAC reports should not be allowed to pass simply because Secretary Napolitano was forced by public pressure to issue a half-hearted apology. She would not even have done that had the DHS report remained

secret. Listed as “UNCLASSIFIED//FOR OFFICIAL USE ONLY (U//FOUO),” the DHS report tells law-enforcement recipi-ents it “is not to be released to the public, the media, or other personnel.” Likewise, the MIAC report prohibits distribution to those outside law enforcement.

With nearly 60 of these DHS federal-state fusion centers nationwide, there is good reason to suspect that other similar reports attacking Americans’ constitution-ally guaranteed rights have been issued or are being developed for dissemination.

This kind of political targeting is very dangerous and underscores why the U.S. Constitution strictly circumscribes federal policing and reserves the vast majority of police powers to the states. The Founding Fathers wisely recognized that gradual encroachment by the federal government could lead to nationalization and the eventual use of a national police force to impose tyranny. While it may be true that corruption and abuse of police powers at the state and local levels will always be a concern as well, the magnitude of the danger pales in comparison to the menace posed by a centralized agency with po-lice authority over the entire nation. The DHS-sponsored fusion centers are further evidence that the DHS is the lead agency of what is rapidly becoming a de facto na-tional police force.

There is an additional facet of the DHS and MIAC reports that begs to be exposed: the strange and alarming symbiosis be-tween the federal government (especially the Departments of Justice and Homeland Security) and certain private left-wing groups. We might ask, for instance, how the DHS arrived at its conclusion that “the most dangerous domestic terrorism threat in the United States” comes from individu-als and cells “embracing violent rightwing extremist ideology.”

According to the DHS report, this as-sessment is based on information “from law enforcement and nongovernmental organizations.” Who are these unnamed NGOs? That is not too difficult to fig-ure out. As we have noted previously in these pages and in our online articles, the wording in the government reports is very similar to what we find in diatribes against conservatives issued by hard-core left-wing groups such as the Southern Poverty Law Center (SPLC), the Anti-Defamation

There is an additional facet of the DHS and MIAC reports that begs to be exposed: the strange and alarming symbiosis between the federal government (especially the Departments of Justice and Homeland Security) and certain private left-wing groups.


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League (ADL), and the Political Research Associates (PRA).

However, the connection goes beyond the mere filtration of biased verbiage by these above-mentioned groups into of-ficial bulletins; they and other organiza-tions have been working closely with the Department of Justice (DOJ) since the Clinton administration officially targeted “rightwing” opponents. The SPLC and ADL websites boast about their work-shops in which they train hundreds of federal and state law-enforcement person-nel in the dangers emanating from “right-wing” threats.

The most important of the nongovern-mental groups impacting the DHS and DOJ in this regard is the Council on For-eign Relations (CFR), which is usually described by the elite media as “nonpar-tisan” and “balanced.” It is probably ac-curate to view the CFR’s April 21, 2008 Backgrounder report, entitled “Militant Extremists in the United States,” as the document that kicked off the current round of official government warnings of a new “rightwing” menace.

According to the study, written by CFR staffer Holly Fletcher, the main domestic security danger to the United States comes from “hate groups motivated by ultra-con-servative ideals that are often anti-Semitic and racially motivated.” Fletcher shows a telling dependence on the SPLC, cit-ing them as an authority several times. She writes, for example, that “right-wing extremists are still considered the most dangerous to the United States, says the SPLC.” And, she writes, “Left-wing and environmental extremist groups are not hate groups, according to the SPLC, be-cause they do not espouse rhetoric that tar-gets specific groups that have a defining characteristic.”

Surprise, surprise, the CFR/SPLC line is precisely the attitude adopted by the DHS! When the furor erupted over the DHS “Rightwing Extremism” report, the DHS and its media shills pointed to a DHS re-port issued in January entitled “Leftwing Extremism.” This supposedly showed that the department is being impartial and even-handed. However, the DHS “Leftwing Ex-tremism” report is far from impartial. It fol-lows the CFR/SPLC lead, falsely claiming that left-wing extremists are comparatively benign because they adhere to a “nonvio-

lent, ‘no-harm’ doctrine” that leads them to simply target property for vandalism, rather than attacking people. The DHS report does not specifically mention the SPLC, but it is most likely referring to them when it quotes a “prominent civil rights organization” on the danger of military veterans being re-cruited by “violent neo-nazis, skinheads, and white supremacists.” The DHS-spon-sored MIAC report specifically references SPLC as one of its sources.

Congressional and state investigations should probe this alarming evidence in-dicating that hard-core left-wing activist groups have become grafted onto govern-ment agencies and are abusing federal and state police powers to target their political opponents.

Mounting legal oppositionPrivate legal efforts to redress the DHS abuses are already underway. The Thomas More Law Center, a national public inter-est law firm based in Ann Arbor, Michigan, announced on April 17 that it had filed a federal lawsuit against DHS Secretary Na-politano. The suit charges that her depart-ment’s “Rightwing Extremism Policy,” as reflected in the DHS Intelligence Assess-ment “Rightwing Extremism,” violates the civil liberties of combat veterans as well as American citizens by targeting them for disfavored treatment on account of their political beliefs.

Richard Thompson, president and chief counsel of the law center, stated, “Janet

Napolitano is lying to the American people when she says the Report is not based on ideology or political beliefs. In fact, her report would have the admiration of the Gestapo and any current or past dictator in the way it targets political opponents. This incompetently written intelligence assess-ment, which directs law enforcement offi-cials across the country to target and report on American citizens who have the politi-cal beliefs mentioned in the report, will be used as a tool to stifle political opposition and opinions. It will give a pretext for op-ponents of those Americans to report them to police as rightwing extremists and terror-ists. You can imagine what happens then.”

The lawsuit was filed in the U.S. District Court for the Eastern District of Michigan on behalf of nationally syndicated con-servative radio talk-show host Michael Savage, Gregg Cunningham (president of the pro-life organization Center for Bio-Ethical Reform, Inc.), and Iraq War Ma-rine veteran Kevin Murray. The law center claims that Napolitano’s DHS has violated the First and Fifth Amendment constitu-tional rights of these three plaintiffs by attempting to chill their free speech, ex-pressive association, and equal protection rights. The lawsuit further claims that the Department of Homeland Security encour-ages law-enforcement officers throughout the nation to target and report citizens to federal officials as suspicious right-wing extremists and potential terrorists because of their political beliefs. n

Terrorists? Every year, millions of law-abiding Americans, like these pro-life demonstrators in Montpelier, Vermont, peacefully march in opposition to abortion.

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by Charles Scaliger

On March 12, 1932, French po-lice discovered a man dead of a gunshot wound in a sumptuous

apartment on Avenue Victor Emanuel III in Paris. After a thorough investigation, it was determined that the man, a middle-aged Swedish businessman, had died of a self-inflicted shot from a 9 mm pistol. The man’s name was Ivar Kreuger.

Nowadays, the name of Ivar Kreuger is remembered by very few, but in the early thirties, the flamboyant Swedish business-

man and financier was the toast of inves-tors and bankers in both Europe and the United States. Kreuger, who was known as the “Match King,” had built his fortune in the then-fledgling match industry. At the height of his influence, he controlled an estimated three-quarters of the world’s match manufacturing. Kreuger maintained six or seven homes on two continents, in-cluding three mansions in Sweden, a per-manent suite at the London Carlton, and apartments in Berlin, New York’s Park Avenue, and the Avenue Victor Emanuel III in Paris. At his Parisian lodging, he en-

tertained an unending parade of mistresses that included Parisian shop girls, students, and streetwalkers.

Not content merely to manufacture “lucifers,” as they were then sometimes called, Kreuger diversified his portfolio to eventually acquire some 200 different corporations. He also was lauded for ex-tending huge loans to many governments foundering in the uncertain financial wa-ters of the postwar 1920s.

Kreuger was credited for singlehandedly rescuing the likes of Poland, Greece, Ecuador, Guatemala, Hungary, Latvia, and Romania from outright bank-ruptcy, and with helping many others, including France and Germany, survive the turbulent period. He usually required that countries who benefited from his largesse, including France and Germany, return the favor by granting his matches preferential trade status. Of the Germans, he even stipulated that they ban all im-ports of matches from Russia, one of his major competitors.

Kreuger also capitalized on his largerthan-life reputation to issue large amounts of debentures, or unsecured long-term corporate debt, to thousands of Swedish investors. These socalled “Kreuger pa-pers” were extremely popular, since it was widely believed that the Kreuger financial empire was on very solid footing.

Events in the early thirties changed all that. The collapse of markets all over the world laid bare balance-sheet weaknesses far and wide. Banks and huge numbers of other corporations that had failed to save for a rainy day, relying instead on the un-warranted belief that unending growth would overwhelm shaky assets or exces-sive leverage, failed spectacularly.

In a climate of renewed financial vigi-lance, banks and other creditors began examining Kreuger’s activities in more detail. As suspicions mounted that the Match King’s financial house was built on sand, banks became reluctant to ex-


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less morals than Madoff: In the 1920s, Ivar Kreuger, a Swedish businessman feted around the world, acquired close to 200 companies, cooked their books, and drained them of assets. He also bilked corporate investors and was a womanizer. No amount of government precautions taken since Kreuger’s day deterred Madoff.

Pyramid SchemesPut in Perspective

The real rub of the Ivar Kreuger and Bernie Madoff sagas is that both men were caught doing precisely what governments do as a matter of course through central banking.

tend further credit. After Kreuger failed to convince the Sveriges Riksbank, the Swedish central bank, to extend an emergency loan (what would now be called a bailout), Kreuger knew the game was up and apparently took his own life rather than face scandal and ruination. (There remain some doubts that Kreuger’s death was suicide, but since he was cre-mated immediately and the gun that took his life disap-peared, the truth will never be known).

When the balance sheets of the hundreds of Kreuger enterprises were examined, it quickly became apparent that Kreuger had for years been running a vast Ponzi (pyramid) scheme. The Kreuger papers and other debts supposedly guaranteed by Kreuger’s assets became worthless over-night when it was revealed that most of his companies had negative worth. The man who has been called “the prince of the first global finance state” had been exposed as an utter fraud.

The collapse of the Kreuger empire had far-reaching consequences, causing the socalled “Kreuger crash” that affected thousands of banks and investors, espe-cially in Sweden and the United States. In the larger context of the Great Depression, however, the Kreuger affair proved to be a flash in the pan, and Kreuger himself merely the gaudiest of a generation of fi-nancial hucksters who had built phantom fortunes in the inflationary economy of the Roaring Twenties. In all, Kreuger’s activi-ties cost banks, investors, and governments hundreds of millions of dollars — a very formidable sum indeed by the standards of the early thirties.

fast forward to TodayOn December 10, 2008, prominent inves-tor, philanthropist, and former chairman of the NASDAQ stock exchange Bernie Ma-doff sat down with his two sons Mark and Andrew to confess to them that the asset management arm of his firm Bernard L. Madoff Investment Securities LLC was nothing but “a big lie.” For dec ades, Ma-

doff had been trusted with the assets of many of the world’s wealthiest and best-connected individuals, charitable founda-tions, banks, and investment firms. Now, he told his sons, the game was up, and he wanted to make a full breast. The follow-ing day, his sons reported their father’s confession to the authorities, and Madoff was taken into custody by the FBI and charged with securities fraud.

As the extent of the Madoff Ponzi scheme came to light, Wall Street learned that one of its own was responsible for hundreds of billions of dollars in stolen assets. The Madoff affair could scarcely have come at a worse time, with markets already reeling from the severest global downturn since the Great Depression. Many institutions with a large exposure to Madoff’s scheme, like European bank-ing giant Banco Santnader, suffered huge losses, and at least two desti-tute clients chose to commit suicide. As with the Kreuger affair almost 80 years earlier, the man on the street marveled that one con artist could have gotten away with so much for so long.

Madoff, in contrast to Kreuger, led a superficially down-to-earth life. The son of hardworking Eastern European immigrants, Madoff started his

professional life as a plumber. He began his career in finance as a penny stock trader in 1960, using money saved while working as a lifeguard and sprinkler installer. Married for decades to his high-school sweetheart, Madoff donated widely to a large number of charities, and sat on the boards of many of the nonprofit organizations he founded or helped to fund.

But evidence now being uncovered shows that, for decades, the munificent Madoff led a double life, stealing inves-tors’ assets and chalking up tens of billions of dollars of non-existent investor assets. Yet in spite of the duration of the fraud — and years of warnings to federal authori-ties by an astute financial analyst, Harry Markopolos, who began telling the SEC a decade ago that Madoff’s claimed assets were obviously bogus — it was Madoff’s own confession, prompted, perhaps, by a

Federal oversight is no guarantee of protection against scam artists. The Madoff scandal may have been made worse precisely because investors consoled themselves that the federal government would safeguard them from being victimized by large-scale fraud.


He should’ve been caught sooner: Bernard Madoff stole billions, but he should have been caught a decade ago — a financial analyst, Harry Markopolos, had been telling the SEC for that long that Madoff’s claimed assets were obviously bogus.

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burden of guilt, that finally exposed the charade.

We would do well to wonder how it is that, in our day of supposedly seamless government vigilance over the activi-ties of investors, the U.S. financial sector could be rocked by two gigantic scandals (Enron, of course, was the first) in a single

decade. The vaunted SEC, founded in the early thirties in no small measure because of the Kreuger affair, is supposed to nip fraud in the bud, shining the light of day on otherwise secretive brokers and financiers, and creating a climate of transparency that would deny the Madoffs of the world cover for their dishonest ambitions.

Yet, as both the Madoff and Enron scandals have made clear, we are no less vulnerable today than was the world in Ivar Kreuger’s time. The parallels between the two men, in fact, are striking: both operated in times of irrational economic exuberance created by the expansionary policies of central banks like the Fed-eral Reserve and the Bank

of England. As in the Roaring Twenties, so too in the Roaring Eighties and Nine-ties: easy-money policies brought about by artificially depressed interest rates en-couraged a bacchanal of debt, a disdain for savings, and an appetite for risk that overwhelmed the sober wisdom of more prudent generations. In such a climate, individuals and institutions were eager to put their money in what in saner times would be deemed very risky places. Ev-erybody was making money, and no one believed that a day of accounting would ever come.

But the mania of artificial economic booms eventually cools, and with it, more sober counsels prevail. In Ivar Kreuger’s case, the contraction of global finances eventually forced his hand. In Madoff’s, the economic downturn probably per-suaded him to come clean, knowing he could not conceal his wrongdoing much longer.

let the Buyer BewareAs the Madoff case shows, federal over-sight of the market is no guarantee of pro-tection against endlessly inventive scam artists. The Madoff scandal, in point of fact, may have been made worse precisely because investors, already giddy from market gains, consoled themselves that the federal government — the SEC in particu-lar — would safeguard them from being victimized by large-scale fraud.

In reality, reliance on free-market forc-es rather than government regulation and oversight is a far sounder way to protect the market against fraud. If individuals and firms must judge for themselves the soundness of an investment, they will be far more vigilant, or less willing to put all their eggs in one basket, if they know they must assume the risk of being defrauded. Caveat emptor works as well with invest-ment portfolios and bank accounts as with used cars.

But if investors expect the government to do due diligence for them, they are far less likely to concern themselves with the balance sheets of the investment houses and banks where they place their hard-earned money. The SEC has proven to be a burdensome failure, thanks to the Ma-doff scandal, yet the Obama administra-tion, undeterred by the spectacular failure of government regulatory intervention in

It is a harsh but unavoidable truth that the entire basis for our modern financial system — the U.S. dollar — is fraudulent, a gigantic confidence game from which no one not living a subsistence lifestyle in the forests of Amazonia or Papua New Guinea is protected.

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Madoff mad money: Actress Kyra Sedgwick (left) and her husband, actor Kevin Bacon, are two of the rich and famous that Madoff bilked. Likely they were too trusting of Madoff because they believed that the government scrutinized investment funds for fraud.

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the markets, is proposing more, not less, market regulation as the solution.

But the real rub of the twin sagas of Ivar Kreuger and Bernie Madoff is that both men, in misrepresenting their assets and using debt to conceal debt, have had the misfortune of being private citizens brought down for doing precisely what governments, thanks to the legerdemain of central banking, do as a matter of course.

This is an obvious point that the news media, in condemning Bernard Madoff, have refused to acknowledge. For if the Madoffs and the Kreugers of the world are guilty of operating fraudulent Ponzi schemes (and they most certainly are), the governments that prosecute them are guiltier still. Even as Madoff — who has at least acknowledged his guilt and will pay for his crimes — is pilloried by the media and prosecuted by the state, the mandarins at the Treasury Department and the Fed-eral Reserve continue to try to stave off the fact of impending national insolvency by printing money and issuing horrendous amounts of new debt that will never, ever

be repaid. The entire United States federal government, addicted to deficit spending, is operating the largest Ponzi scheme the world has ever seen, defrauding not merely a few investors but every U.S. citizen and every institution, public or private, on the face of the Earth that holds U.S. govern-ment debt.

This is so because the money that the U.S. government uses to pay its obliga-tions — the U.S. dollar — loses value con-stantly thanks to the activities of the Fed-eral Reserve. The effects of this inflation (artificial expansion of the money supply) are higher prices and the gradual erosion of the value of savings. This means that Treasury bonds and bills — instruments of debt which the government pledges to repay — will be redeemed in depreciated dollars, effectively defrauding holders of government debt. It is thus ironic that, even as Bernie Madoff is rhetorically and prosecutorially hung in effigy, the Federal Reserve has expanded the money supply by about $1.2 trillion, which will trigger a calamitous decline in the value of the dol-lar in the not-too-distant future.

Whether or not government imposes its heavy hand on financial activity, scam artists large and small will always be with us. But in a day when the government is expected to be intimately involved in the marketplace, the reality of fraud and scan-dal will actually be greater, and not only because the Bernie Madoffs of the world will find ways to operate under the radar screen.

It is a harsh but unavoidable truth that the entire basis for our modern financial system — the U.S. dollar — is fraudu-lent, a gigantic confidence game from which no one not living a subsistence lifestyle in the forests of Amazonia or Papua New Guinea is protected. For on the day the dollar Ponzi scheme comes apart, the day people realize that the U.S. government never intends to repay its debts or can’t repay its debts, triggering an unprecedented global currency crisis and the end of the dollar as the world’s reserve currency, the misdeeds of the Ma-doffs and Kreugers — penny ante play-ers by comparison — will seem almost forgivable. n

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a New faceLast November, John Cannon, a resident of Aguanga, California, called Fox 11 News in Los Angeles for help solving a problem he was having with a medical claim. The station was unable to help him, but during the course of the conversation, Cannon de-scribed to the medical producer the plight of his neighbor, James Pollette.

On January 21, 2006, Pollette under-went a 23-hour surgery to remove cancer from his face. The surgeons had to remove his entire nose, left eye, and surrounding tissue about the size of a baseball. As he was (and still is) uninsured, facial recon-struction was impossible for financial reasons. Pollette had lived with the severe deformity of having only half a face for almost three years when his condition was brought to the attention of Fox 11 News.

Gerri Shaftel, the station’s medical pro-ducer, was so touched by Pollette’s story that she sent a crew out to do a story on him, which aired on November 18, 2008. The show described his dilemma, and in-cluded interviews not only with James and some friends, but with his goddaughter, 10-year-old Mary Ann Simmons. The pro-gram ended with a plea by Simmons for any doctors in the audience who could help her much-loved friend and godfather.

FoxNews.com reported on April 2 the amazing outcome of that program. Shortly after the show aired, Pollette was contacted by Matt Singer, a prosthetic specialist who offered to make James a facial prosthesis at no charge. Matt was joined in the gen-erous gesture by oculist Stephen Haddad, who volunteered to make a prosthetic eye, and optometrist Jeanette Yu, who would donate a pair of glasses.

Singer is a former Hollywood special-effects artist who has worked with such ce-lebrities as Whoopie Goldberg and Robin Williams. Looking for a more rewarding career, though, he went back to school to study maxillofacial prosthetics. His goal was to apply his talents “to help people in real need,” he told FoxNews. What an op-portunity he got in James Pollette!

After more than two months of hard work and dedication, Singer’s “special ef-fect” for James was complete. Haddad’s prosthetic eye finished the project, and on

February 11 Pollette received his “new face.” He can wear his new glasses so he can see out of his right eye — for the first time since his cancer surgery. And after liv-ing with his deformity for three years, he can now go out in public, no longer a man without a face, thanks to Matt Singer.

supreme self-sufficiency: The Way it should BeThese days it seems everyone has a hand out, expecting a handout from the Nanny State. It is difficult to remember a time when Americans were self-sufficient and independent, and would actually make a sacrifice when something was needed.

So how refreshing it is to read about a group of residents and business own-ers near Polihale State Park on the island of Kauai. CNN.com reported on April 9, 2009 how this group of citizens took ac-tion to do what needed to be done.

Polihale was closed in December 2008 due to severe flooding that destroyed some facilities and an access road. As it is a state park, the government was the logical first choice to repair the damage. The Hawaii Department of Land and Natural Re-sources estimated the repairs would take two years and cost $4 million. However, as the state did not have the $4 million, the construction was put off indefinitely.

When several business owners whose livelihoods depend upon the park heard this, rather than whine and moan about it, they decided to take on the responsibility themselves. One of those business own-ers is Ivan Slack, whose company, Na-pali Kayak, relies solely on kayak tours at the park. “If the park is not open … bankruptcy would be imminent” for his business. So “we can wait around for the state or federal government to make this move, or we can go out and do our part,” he told CNN.

Slack and several other residents donat-ed their own time, funds, and equipment, and got busy repairing the park’s damage themselves. Work that the government es-timated would take two years to complete took private citizens only eight days!

Once the repairs are inspected, the park

will be open again in time for the busy tourist season, and no business will be lost due to the damage. “We got together — the community — and we got it done,” said Troy Martin, whose company, Martin Steel, donated machinery and steel to the effort. The community has demonstrated what can happen when the government gets out of the way and private capital, labor, and ingenuity are allowed to “get it done.” Which is the way it should be!

Two Women Try to spread the “Pay it forward fever”Many people in West Michigan were re-cipients of kind gestures in March, thanks to two women and their “Helping Hands.” Grand Rapids WZZM Channel 13 reported on April 2 how these two women, known only as Karla and Amy, decided to perform random acts of kindness every day during the month of March.

Some of those acts were small, such as paying the bill of the car behind them at a fast-food drive-thru (Day 6). Some were medium, such as paying for a stranger’s gasoline (Day 2). Some of those acts were large, such as on Day 1 when the ladies made up 100 care packages for the home-less. And Day 7 was supersized, with the “30 Random Acts of Kindness in 1 Day Challenge.”

The women’s blog (http://1-dollar-a-day.blogspot.com/2009/03/helping-hands-project-month-in-review.html) describes each day’s giving. Acts also included send-ing flowers to nursing-home residents, leaving exact change required at laun-dromats and pay phones, leaving cards of encouragement on random windshields in a hospital parking lot, distributing scarves and umbrellas for the homeless, and even leaving bags of doggie treats in the park!

Why would they do these things? First, to boost the spirits of strangers and “make someone’s day.” Surely they have suc-ceeded in that. And second, they hope that others will catch the “pay it forward fever” and will be inspired to do random acts of kindness themselves. Let us hope they succeed in that, as well. n

— liANA sTANley


THE GOODNESS OF AMERICA

by Michael E. Telzrow

I n the wake of President Obama’s $3.6 trillion budget and a series of bank and industry bailouts by the Federal

Reserve, the specter of hyperinflation haunts the United States. There are plenty of historical examples of what hyperinfla-tion can do to an economy. One need not necessarily look to 1920s Weimar Germa-ny for an example; presentday Zimbabwe provides the most recent version of the economic wreckage caused by government planning that devalues a national currency. But Weimar Germany is instructive in that it illustrates the social, political, and cul-tural destruction caused by hyperinflation that leads to the loss of liberty; for it was Weimar Republic Germany that gave birth to the political success of Adolf Hitler and the Nazi movement.

Social and political revolutions often fol-low defeat on the battlefield, and so was the case with Germany in the wake of World War I. By the summer of 1918, it was apparent that Germany had lost the war. Even the absurdly optimistic reports from the High Command could not hide the fact that the German Army would not prevail on the field of battle. Five years of warfare in which soldiers from both sides were sacri-ficed in meat-grinder-like assaults on en-trenched positions had nearly wiped out an entire generation of German men. Since ar-riving in France in 1917, American troops had tilted the balance of power in favor of the Allies, and it was only a matter of time before the Yanks would turn the tide.

Choked by an Allied blockade that threatened starvation at home, and bat-tling a loss of confidence in Kaiser Wil-helm II, the army readied itself for defeat. In order to deflect responsibility for de-feat, army leaders handed over power to a civilian government under Prince Max von Baden in October 1918. The begin-ning of the end came when the German naval command, as part of a last-ditch ef-fort, ordered the fleet at Wilhelmshaven

to engage the British fleet — a ludicrous command that compelled the majority of sailors to mutiny. Demonstrations at Kiel, Germany, on November 3, 1918, ignited a larger mutiny and soon soldiers, sailors, and workers from all over Germany were organizing local “soviets” in order to take control of local governments. Senior Prus-sian officers no longer controlled the army, but in what became a characteristic of the “1918 revolution,” mutineers and erstwhile revolutionaries generally maintained order in their ranks. In many cases, junior and

non-commissioned officers were elected to lead defeated or mutinous units back home. It was, in the end, perhaps the most ordered military collapse in the history of warfare. Carl Zuckmayer, a young German officer commenting on the scene, wrote, “Starving, beaten, but with our weapons, we marched back home.”

RevolutionHorrific losses in France’s Argonne For-est region put the final nail in the coffin, and on November 9, 1918, a cease-fire was

Lessons of the Weimar RepublicThe history of Weimar Germany illustrates how the social, political, and cultural destruction caused by hyperinflation so easily leads to the loss of liberty.

its real value: This German woman literally burns money in the wake of the unwise decision by the German government to print huge amounts of money to pay that country’s debts after WWI. The inflationary measure was soon taken to the point where the currency became virtually worthless.


— PasT and PErsPEcTivEHisToryHisTory

announced, and General Wilhelm Groener ordered what remained of the army to withdraw from the front lines. The kaiser’s abdication followed quickly and Prince Max von Baden, who had been acting as chancellor since October, handed power over to Social Democrat leader Friedrich Ebert.

A republic was quickly declared, but its form was completely unknown at the time. In any case, the new “republic” had to quickly deal with a host of problems including signing an armistice, demobi-lizing an army, and gaining control of a growing revolution. The kaiser’s abdica-tion forced other German crowned heads to do the same. But unlike the Russian Revolution, where the communists spilled the blood of royalty, and delightfully shot Tsarist army officers, this German revolu-tion maintained the strange sense of deco-rum that characterized the unit mutinies a month earlier. They would not repeat the brutality that the Bolsheviks had visited upon the Tsar and his family. These revo-lutionaries displayed their anger by merely cutting off officer rank insignia rather than resorting to lynching, as was the fashion in Russia. Unnerved by an orderly crowd, an old Berliner was heard to remark, “I don’t like these peaceful revolutions at all. We shall have to pay for it some day.”

Soldiers wearing red arm bands signify-ing them as socialists or “reds” began to stream into German towns, and as the Ger-man army returned home it was demobi-lized in short order. Workers’ and soldiers’ councils sprouted up initially in Hamburg, Cologne, and Wilhelmshaven, and they

soon spread throughout the country. A few of these groups were considerably radical, but many were born of a desire to end the war and protect local communities from a capricious transitional government. Still, there was no doubt among the citizenry that a revolution had taken place.

Between October 1918 and March 1919, Germans endured revolutionary activity across the country as Marxists, socialists, and nationalists each vied for power and influence. Taking advantage of the situa-tion, Marxists sought to overthrow capi-talism and establish a proletarian state. They had earlier broken with the Social Democrats (SPD) and they now looked to appropriate the revolutionary movement.

Even before the armistice was signed on November 11, SPD party leader Kurt Eisner and his followers seized control of Munich and declared it a Bavarian Repub-lic. Just as Friedrich Ebert of the “moder-ate” Social Democrat Party was declaring a new democratic republic on November 9, 1918, Karl Liebknecht of the Independent Socialists (USPD) was poised to declare the establishment of a new socialist republic with support from the revo-lutionary masses. Ebert knew that he needed the support of at least a small number of Independent Socialists in order to head off Liebknecht’s push for a socialist republic. He got the support he needed with the forma-tion of a Council of People’s Com-missars consisting of three USPD leaders and three from the SPD. Liebknecht had been stymied.

Later that day, Ebert received a

call from General Groener at army head-quarters in Spa. It was then that Groener told Ebert that the kaiser had left Germany for Holland, and that he wished that the new government would lend support to the officer corps, and the Prussian military tra-dition, as it maintained order in the ranks. Groener also offered Ebert the support of the army if Ebert would help resist Bol-shevism by quelling the activities of some of the more radical soldiers’ and workers’ councils. Ebert hated Bolshevism as much as Groener; he preferred a constitutional monarchy, and in the end he pledged the new government’s support in exchange for the army’s assistance in combating the Bolshevik challenge.

On November 11, 1918, the armistice was signed between German and Allied representatives. The war was finally over and a new fledgling government was in place.

The period between the armistice and the elections for the National Assembly in January 1919 was marked by tension between the SPD and the USPD, the lat-ter being constantly influenced by hard-left Marxist elements within the group. Ebert spent most of his time governing the transition from a war-time economy and finding ways to alleviate the economic hardships of the average German. Mean-while, Marxist agitators spent their time marching in the streets and planning upris-ings. During December 1918, Ebert’s SPD

Social and political revolutions often follow defeat on the battlefield, and so was the case with Germany in the wake of World War I. It was Weimar Republic Germany that gave birth to the political success of Adolf Hitler and the Nazi movement.

The Versailles Peace conference, 1919, led to inflation in Germany and the rise of Hitler. The peace terms by the Allies demanded 14 percent of German territory, half its iron ore, and a quarter of its chemical and pharmaceutical products — along with cash payments. Germans were economically devastated by these demands, and so Germany began to print more money to pay its debts.


clashed with Liebknecht’s newly formed Spartakusbund, leaving 16 dead in the streets. In January 1919, the Spartacists at-tempted to overthrow the government but were crushed by the army and Freikorps troops — volunteers raised by individual army commanders. The failed uprising ended with the murders of Liebknecht and his close ally, Rosa Luxemburg.

Workers’ demonstrations and small-scale disturbances continued, but the army and the Freikorps ensured that the new re-public would not veer sharply left. The Na-tional Assembly elections on January 19, 1919, enjoyed an 83-percent turnout that included, for the first time, women over 20 years of age. Ebert’s SPD party secured 38 percent of the vote, with the Catholic Centre Party getting almost 20 percent. Nationalist and monarchist parties secured less than 15 percent of votes cast. In February, delegates elected Ebert as the first president of the republic in the town of Weimar, from whence the new government took its name.

ChallengesNothing influenced the new Weimar Republic and the subsequent history of Ger-many more than the peace settlement signed at Ver-sailles. Foreign Minister Count Brockdorff-Rantzau would lead the negotia-tions for Germany. Earlier, he had been one of the few who had supported a com-promised peace in 1917, and he was confident that he

would secure an honorable and lenient peace from the Allies. Brockdorff-Rantzau was counting on the Bol-shevik threat and Wilson’s Fourteen Points to enable Germany to remain a viable European power. He knew that there would be some territorial concessions, but he was not prepared for what would ultimately tran-spire at Versailles.

In the wake of four years of brutal warfare that had destroyed large areas of France and Belgium and resulted in the loss of millions of lives, the Allies were in no mood to proffer lenient terms. Germa-ny would lose huge areas of land, includ-ing Alsace-Lorraine to France, and most of West Prussia, Upper Silesia, and Pozen to the newly formed Poland. Danzig would become a “free city” under the newly cre-ated League of Nations, and Germany was to lose all of its overseas colonies. The in-famous 231 “war guilt clause” shifted the blame for the war entirely to Germany, and Germany’s army was reduced to 100,000 volunteers. Its navy was to be limited,

and entry into the League of Nations was forbidden. More devastating, particularly for a country emerging from a costly war, were the unspecified reparations forced upon Germany. By May 1921, Germany was required to make payment of 20 bil-lion gold marks as an interim payment. On May 12, SPD Prime Minister Philip Scheidemann declared, “What hand must not wither which places these fetters on itself and on us?”

But for the Allies, these terms seemed just. Anti-German feeling ran very high, particularly in the European countries that had suffered at the hands of the Hun. It was time to make them pay, and that feeling dominated the political scene for years after the war, particularly among the French, who no doubt had had enough of German militarism. Sadly, had the Allies not taken this approach, and instead had looked to ways to support an evolving German political institution, Hitler might never have come to power. Defeat, coupled with the harsh reality of Versailles, was a traumatic experience for Germany. It re-inforced the sense of betrayal — “the stab in the back” allegedly perpetrated by Jews and socialists that had ultimately defeated

the supposedly unbeaten German army, and the repa-rations issue became a rally-ing point for nationalists.

Occupation and HyperinflationBy 1920, political and eco-nomic questions related to the reparations issue were becoming a serious concern. How could a weak Ger-man economy address the unimaginably high level of reparations? Germany had fi-nanced the war through loans and bonds (sound familiar?). Inflation was already present

Although not in exactly the same position as Weimar Germany, the United States now finds itself under the rule of its own charismatic leader and a Federal Reserve that together seem bent upon debauching our currency through inflation. Our disaster could be worse than Weimar Germany’s.

The coming of the Weimar republic: Philip Scheidemann, without seeking approval of the SPD Party to which he belonged, announced from a window of the Reichstag that with the abdication of Kaiser Wilhelm II, Germany was now a republic.

36 TNA • MAy 11, 2009


when Joseph Wirth’s government pursued a policy that further fueled inflation be-tween 1921 and 1922. Wirth’s policy was designed to show that Germany could not meet its reparations payment responsibili-ties. By printing more paper money, Wirth initiated a plan in which Germany would make reparations payments in increasing-ly worthless marks. Better to pay in cheap worthless marks, so Wirth thought.

The Allies, particularly the French, had other ideas. On January 9, 1923, the French used a shortfall in German coal deliveries as a pretext to invade and occupy the Ruhr region of Germany. Their aim was to “su-pervise” production of the coal that was part of the reparations deal struck at Ver-sailles. Payment of reparations “in-kind” would now be seized at its source. In the eyes of the French, anything that weakened Germany was a benefit to France. The Wei-mar Republic responded to the invasion by advocating passive resistance. Industrialists were ordered not to comply with French orders or to hand over any coal stocks.

A government-backed general strike was called in the Ruhr, and was financed entirely by the printing of even more paper money. Fearing the loss of capital, credit was extended to factory owners so that they might keep their operations running during the general strike. The loss of earn-ings, however, exacerbated the situation and led to spiraling hyperinflation. Within six months, the currency completely col-lapsed. With it went all confidence in the republic. Fear and panic followed as mil-lions of Germans found themselves in financial ruin. In August 1923, one dol-lar was worth 4.6 million marks. Three months later it was worth 4,000 billion marks! To keep up with the pace of in-flation, 133 printing offices pumped out marks for the Reichs bank. Ordinary items like bread cost millions of marks. It was impossible to keep up with the pace of inflation but the Reichs bank tried by in-creasing the money supply — a move that made the situation even worse.

By October it cost the Reichs bank more to print the notes than they were worth. This completely irresponsible and cata-clysmic action wiped out savings accounts, personal annuities, stocks, and pensions. While the middle class was being de-stroyed, industrialists and large businesses benefited from the devaluation of the cur-

rency. Those businesses that had issued stock found it easy to pay off their debts with worthless currency at a “mark equals mark” ratio. By November 1923, workers were being paid five times a week, real wages were down 25 percent, and banks were issuing notes by their weight.

Hyperinflation brought with it new, more ominous signs of social degradation. The German generation that valued thrift and fiscal responsibility now dealt with a situation in which plummeting home val-ues destroyed the very concept of savings. Years of saving and scraping to purchase stability through home ownership went for naught and the lesson was not lost on a younger generation that now saw saving as a pointless endeavor.

A youthful generation set adrift from traditional moorings naturally gravitated to immorality. Marriage was no longer an economically secure arrangement. Con-sequently, the commercial sex industry bloomed, particularly in Berlin. Klaus Mann, son of the author Thomas Mann, later described an encounter with a Ber-lin prostitute. “One of them brandished a supple cane and leered at me as I passed by,” wrote Mann. The exchange ended

when the prostitute offered her services for “six billion and a cigarette.” Seeking plea-sure in activities that had formally been eschewed in favor of virtue became com-monplace. Stefan Zwieg, a contemporary of Klaus Mann, summed up the Weimar mood thusly:

It was an epoch of high ecstasy and ugly scheming, a singular mixture of unrest and fanaticism. Every ex-travagant idea that was not subject to regulation reaped a golden har-vest: theosophy, occultism, yogism, and Paracelcism. Anything that gave hope of newer and greater thrills, anything in the way of narcotics, morphine, cocaine, heroin found a tremendous market; on the stage in-cest and parricide, in politics, com-munism and fascism constituted the most favored themes.

Passive resistance in the Ruhr was called off in September, but not before the dam-age had been done. The new German state was in danger of falling as extremist groups like Adolf Hitler’s National So-cialist German Worker’s Party (NSDAP) maneuvered for power. Inflation primed the pump of aggression and political ex-

Million-mark note paper: 1923-issue 50 million-mark banknote. Worth approximately $1 U.S. when printed, this sum would have been worth approximately $12 million, nine years earlier. The note was practically worthless a few weeks later due to continued inflation.

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tremism. A number of Marxist groups had threatened unrest in Saxony and Thurin-gia, and Hitler used the opportunity as a call to arms in a Munich beer hall. Hit-ler’s secondary aim was to attain Bavarian autonomy.

Impressed with Mussolini’s “March on Rome” in 1922, Hitler planned his own “March on Berlin.” In November 1923, Hitler seemed on the verge of success when some of his powerful supporters in Bavaria retracted their support for the for-mer army corporal. The Nazi putsch failed after some of Hitler’s supporters were shot in front of Munich’s Feldherrnhalle. Hit-ler was arrested and endured a short trial in which he received some public notori-ety. After conviction, he served but a few months of a five-year sentence in relative comfort at Landsberg prison. It was there that the architect of the Holocaust wrote Mein Kampf — the little book that would lay out his twisted political ideology.

Stabilization and the FallEventually the German currency was stabilized, but at a great cost. Unemploy-

ment was rampant, wages dropped, and high prices dominated the market. But by 1924, it appeared that the problems of the early republic were over. Foreign Minister Gustav Stresemann success-fully regularized foreign relations with the Western Allies. In 1924, the Dawes Plan married American economic inter-ests with Germany, and reparations ar-rangements became more manageable. In 1925, the hated French began leaving the Ruhr, and by 1927, the disarmament commission was withdrawn. By 1930, the Rhineland was to be cleared of any for-eign occupation. Under Stresemann, Ger-many had made remarkable progress on the foreign-policy front, but there were other problems on the horizon for the new republic.

A specter of national decline sapped the strength of the republic. Fewer and fewer young people supported the Weimar sys-tem; they were often more concerned with drinking and dancing. Indeed, one of the unfortunate outcomes of the First World War was that many youths of 1920s Ger-many grew up without fathers. The tradi-

tional ties that tethered the young to their families and communities were torn asun-der by the war and the post-war upheav-als. Weimar Germany was a liberating experience for young Germans, but they increasingly began to see the government as dominated by prewar political parties. The SPD and the Catholic Centre Party seemed stodgy and not capable of insti-tuting the rapid social change that enam-ored Germany’s youth. By the late 1920s, most German youths were more likely to identify themselves with the Communists (KPD), or the Nazi Party. They were sim-ply bored with what Goebbels described as an “old men’s republic.”

Constant concessions to the left by weak governments fueled nationalist fer-vor. The hyperinflation debacle had also sapped much of the middle-class support for the republic. As today, those people saw the value of their homes and savings decline while debtors seemed to benefit from the easy-money policies of the Wei-mar Republic. Leftists, too, had much to complain about. For them, the republic had betrayed its socialist roots.

Despite seeming stabilization, the so-cial, political, and economic problems that plagued the new republic never dis-appeared. Much of it was self-inflicted — the devaluation of its currency in order to punish the French, costly welfare schemes included in the state constitution, ineffec-tive coalition governments, and an ongo-ing yearning for the old days of Imperial Germany combined to set the stage for its failure. Finally, a worldwide depression and the rise of a charismatic leader put an end to the ill-fated republic.

Although not in exactly the same posi-tion as Weimar Germany, the United States now finds itself under the rule of its own charismatic leader and a Federal Reserve that together seem bent upon debauching our currency through inflation. By “prim-ing the pump” in super Keynesian fashion, the Obama administration courts an eco-nomic disaster that could make Weimar Germany look fiscally sound. n

Busted by a “bailout”: Germans in the early 1920s suffered from the effects of war reparations, trade restrictions, political infighting, and, especially, inflation. Here a line forms outside a soup kitchen in Berlin. Malnutrition and starvation were widespread.



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No Honor among ThievesDerek Clark, a member of a gang who tried to force its way into Derrick Murray’s home in Evansville, Illinois, on March 15, proved the old adage that there’s no honor among thieves. He learned much about his “friends” as he fled after being wounded by the alert homeowner.

Murray first learned of impending dan-ger when the noise of several men break-ing down his door awakened him early. Murray’s first thoughts were that if he did nothing his four children, who thankfully were not home at the time, could grow up without a father.

For personal protection, Murray keeps a semi-automatic rifle in his bedroom. He grabbed it and met the intruders as they broke through the door. One of the intrud-ers was clearly armed. The gang members tried to convince him they were police of-ficers, but their slang and foul language, and the fact that they didn’t illuminate the scene with some type of lights gave them away. He fired at the man holding a gun, Clark. In-terviewed after the attack by the Evansville Courier, Murray said: “I just felt like I can’t die right now, I got too many kids, I got too much to lose. I can’t die right now.”

Murray hit Clark in the leg, and then cautiously followed the wounded man as he crawled outside after the rest of his gang.

Outside, the gang members first half-heartedly tried to help the wounded Clark into the vehicle. But they abandoned Clark, and Murray watched as the get-away car began to pull away, running over Clark, then backing up and running over him again as the gang fled. Clark was later rushed to the intensive care unit at St. Mary’s Medical Center.

Murray had no idea why his home was targeted, and the investigation continues as police attempt to identify the other attackers.

“I’m still breathing,” he said. “I feel good. And I can see my kids when they pull up in a couple hours.” Murray added that he would have reacted somewhat differently had the children been home. “It would have been a death sentence,” he said. “You don’t do that to a man when he’s with his kids at all. It would

have been much uglier. That gun held 60 rounds and I would have shot all 60 at them.”

Murray was within his rights in firing on Clark, according to a statement from Evansville Police Department detective Sgt. Larry Nelson. “He had a right to protect himself,” Nelson told reporters. Nelson also confirmed that no permit was necessary for Murray to keep the gun in his home.

Troublemaker Picks the Wrong PlaceOn March 4 at Schrank’s Smoke ’N Gun, a specialty shop in Waukegan, Illinois, a man made the foolish decision to rush an employee of the store through a gap in the counters.

Police indicated that robbery may have been the motive. The primary suspect in the assault and possible robbery remains hospitalized due to his wounds, and is still heavily sedated over a month later. Po-lice have indicated that they will not file charges until they are able to communicate with him.

The conflict erupted when the man rushed behind the counter in the shop, and began struggling and arguing with an employee. The conflict became a physical struggle very quickly, according to Wauke-gan Police Commander Wayne Walles.

In a telephone interview with The New AmericAN, the employee, who declined to be identified, said that the attacker attempt-ed to grab his sidearm during the assault. It was at this point that the employee drew and fired three times in self-defense.

The employee said that he shot the man twice in the chest and once in the groin area. The Lake County News-Sun report on March 5 confirmed that the suspect was hit three times. The employee explained that he was only slightly injured by flash burns in the brief struggle, and was treated and returned to work.

The injured suspect was flown to Vista West Hospital, and then transferred to Ad-vocate Lutheran General Hospital in Park Ridge where he underwent several opera-tions and was still being treated.

Customers were mystified by the attack. They told reporters that the employees all openly carry weapons, and the manager is a marksman who teaches shooting cours-es. The shop is also patronized frequently by law-enforcement officers.

Justice PrevailsIn January the Waukegan Grand Jury de-liberated and then ruled in favor of armed self-defense in a case involving an inci-dent in Waukegan in October 2008.

A Chicago Tribune account of the case on January 9 indicates that a clerk, a fam-ily member of the owners, at Peoples Market was robbed at gunpoint. The clerk retrieved his own firearm and shot at Bran-don Starks, 20, as the thief fled on a bi-cycle, still holding the weapon used in the robbery. Starks was hit and pronounced dead shortly after that. He had been pa-roled from prison on a residential burglary conviction less than a month earlier. A sec-ond man was with Starks, and police are still looking for that man.

The clerk later faced possible charges in the case, but the majority of the public was clearly on his side. At the time, a statement by the local mayor revealed a popular sen-timent often left out of media accounts. “Any time you point a gun at me and if I’ve got a gun and I’ve got the opportuni-ty, I’m going to use it on you,” Waukegan Mayor Richard Hyde said. “With society the way it is now and with the number of armed robberies you have, you’ve got to fight back.”

An official explanation of the ruling by Deputy State’s Attorney Jeff Pavletic in the Chicago Daily Herald noted: “All the results of an exhaustive investigation were put before the grand jury.” He added: “It was decided that the shooting was in self-defense and therefore justifiable.” Hurrah for the grand jury and the Bill of Rights!

Bad guys beware, it isn’t just the gun-shop owners and an occasional store clerk who stand ready to exercise their right to armed self-defense; many Americans — even those you may face in court — sup-port that God-given, constitutionally guar-anteed right. n

— AlAN scholl


“... the right of the people to keep and bear Arms, shall not be infringed.” EXERCISING THE RIGHT

give ’Til it Hurts, repeatItem: The Washington Post for March 31 reported: “The billions of dollars spent in U.S. aid to Afghanistan over the past seven years have been largely wasted, Secretary of State Hillary Rodham Clinton said Monday. ‘For those of you who have been on the ground in Afghanistan, you have seen with your own eyes that a lot of these aid programs don’t work,’ she said. ‘There are so many problems with them. There are problems of design, there are problems of staffing, there are problems of implementation, there are problems of accountability. You just go down the line.’ Clinton called the amount of money spent without results ‘heartbreaking.’”

The secretary was speaking to reporters as she flew to The Hague to attend a con-ference to promote the Obama administra-tion’s new policy for Afghanistan.

Clinton’s “blunt comments on past aid programs — which appeared to also in-dict the broader international effort — will probably raise the bar for the administra-tion’s aid programs. ‘We are scrubbing every single civilian program,’ she said. ‘This is part of my mission as secretary of state. We are looking at every single dollar as to how it’s spent and where it’s going and trying to track the outcomes. We want to see real results.’”Item: The Christian Science Monitor for March 23, in an article entitled “Economy forces Obama to rein in foreign-aid goals,” reported: “The Obama administration is hinting that the economic downturn means the president is unlikely to reach his goal of doubling foreign aid by the end of his four-year term.”

Some “development experts,” contin-ued the paper, “note that the president’s 2010 budget includes an almost 10 per-cent jump in foreign aid — an increase they consider positive given the economic circumstances.... Though the development community reacted ‘pretty positively,’ says Steve Radelet of the Center for Global De-velopment in Washington, ‘there’s still a wait-and-see attitude.’

“The idea of doubling foreign aid to $50 billion a year by 2012 was a key el-ement of President Obama’s campaign

pledge both to revamp the way America works with the world — particularly with developing countries — and to improve America’s image abroad.”CorreCtIon: Insanity has been defined as doing the same thing over and over again and expecting a different result. This also might characterize the government-to-government subsidy practice euphemisti-cally known as foreign aid.

President Bush doubled “development assistance” and President Obama wants to do likewise — though apparently ham-pered a mite by other multi-billion-dollar bailouts at the moment.

The fact that even Hillary Clinton has acknowledged the widespread failures of foreign aid nevertheless should not be viewed as a case of the government learn-ing its lesson. She is merely stating what has become obvious to all too many oth-ers. Nor, of course, is she or anyone in the Obama administration calling for an end to foreign aid, but rather is seeking one more reinvention of the process of delivering said “assistance” — which will undoubt-edly lead to many of the same inherent problems as earlier handout efforts.

Even a task force in the (Bill) Clinton administration admitted that “despite dec-ades of foreign assistance, most of the Af-

rica and parts of Latin America, Asia and the Middle East are economically worse off today than they were 20 years ago.”

Indeed, many countries are worse off because of such aid, not just in spite of it. There may well have been good inten-tions by the donors, but that doesn’t mean the results are any less harmful. Take the case of Micronesia. The late David Oster-feld, a professor of political science at St. Joseph’s College, wrote in Prosperity vs. Planning: How Government Stifles Eco-nomic Growth: “The pauperization of Mi-cronesia was a direct result of foreign aid. The United States acquired Micronesia as a trust territory in 1945 following its liberation from the Japanese. Outside pri-vate investment was discouraged because it would, according to U.S. Navy officials, ‘reduce the people to cheap labor.’ Instead, the people of Micronesia were given free food, clothes, and other supplies. The result was bankruptcy of many local stores and undermining of the incentive to work.”

Both opponents and supporters of for-eign aid have been coming to such conclu-sions. More than a decade ago, the World Bank itself, even as it called for more fund-ing, admitted how poorly aid programs had been working: “While the former Zaire’s Mobuto Sese Seko was reportedly

“Billions of dollars … largely wasted,” was how Secretary of State Clinton described the U.S. aid spent on Afghanistan before she flew to the March 31 International Conference on Afghanistan, where she held this joint press conference with Dutch Foreign Affairs Minister Maxime Verhagen.

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amassing one of the world’s largest per-sonal fortunes (invested, naturally, outside his own country), decades of large-scale foreign assistance left not a trace of prog-ress. Zaire (now the Democratic Republic of Congo) is just one of several examples where a steady flow of aid ignored, if not encouraged, incompetence, corruption, and misguided policies.”

Study after study has demonstrated that such aid has not helped the economies of the recipient nations or, even worse, has actually hurt their people. The mounds of literature about foreign aid and economic growth, as pointed out by Carol Adelman and Nicholas Eberhardt in “Foreign Aid: What Works and What Doesn’t” (Ameri-can Enterprise Institute), show that “these state-to-state transfers inhibit competi-tiveness, create dependency, and absorb or misallocate political resources or ener-gies in recipient countries; note that aid is motivated by nondevelopment donor and contractor interests; and prove that aid en-genders a lack of feedback and account-ability, encouraging host country graft and corruption.”

A Canadian Senate committee deter-mined that the expenditure of $12.4 billion between 1968 and 2007 for the Canadian International Development Agency failed to make any difference in sub-Saharan Africa. The international Oxfam group, in like fashion, has just released a report that says most American aid in Afghanistan is being wasted on consulting and subcon-tracting and duplication of effort.

When such shortcomings are apparent to promoters of foreign aid in other countries, even the U.S. Secretary of State can con-cede that which is evident. Yet, we are sup-posed to believe that somehow her “scrub-bing” of the next truckload of dollars will make them so much more efficient.

Foreign aid has also been described as the transfer of wealth from the poor in rich countries to the rich in poor coun-tries, which rings true for government aid. But religious groups, private charities, businesses, foundations, universities, and others do make a real difference, for the better, with their international aid work — usually done at the local level and by those

not dependent on tax dollars.Giving away someone else’s money,

which is what is done in Washington and other tax-collecting capitals, is decidedly not charity. Americans, nevertheless, do remain a charitable and generous people and would likely be even more generous if not forced to support such a large and meddlesome central government. As noted in a study by the Hudson Institute (“The Index of Global Philanthropy, 2008”): “In the U.S., private philanthropy, along with remittances, to developing nations consti-tutes four and one-half times our official aid abroad.” (Emphasis in original.)

One expert who sees what is happening with international government subsidies, and hasn’t donned rose-colored glasses about how a bureaucratic fix will make things better, is Dambisa Moyo, the author of the new book called Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Moyo was born in Zam-bia, has her master’s from Harvard, and a Ph.D. in economics at Oxford. She has been a consultant to the World Bank, and for eight years was the sub-Saharan eco-nomic expert for Goldman Sachs.

In a recent interview with Guernica magazine, she explained that persisting with such foreign-aid giveaways “will definitely make things worse. Remember

that in the 1970s, Africa had 10 percent of its population living in poverty; today that number is over 70 percent. To con-tinue down a path of depending on aid — which doesn’t create jobs, or innovation, or alternative and more transparent ways of development finance — the number of impoverished Africans could get to 80 or 90 percent in our lifetime.”

Her work has attracted favorable atten-tion. (Accordingly, Dr. Moyo has garnered some harsh criticism as well, such as by Michael Gerson, a former speechwriter for President George W. Bush who is a senior fellow at the Council on Foreign Relations and an advocate of more aid, albeit in a reformed manner.) Economist Moyo also made her case in the Wall Street Journal, saying: “Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population — over 350 million people — live on less than a dollar a day, a figure that has nearly doubled in two decades. Even after the very aggres-sive debt-relief campaigns in the 1990s, African countries still pay close to $20 billion in debt repayments per annum, a stark reminder that aid is not free.”

As she writes in her book:

so, let’s give away twice as much : President Obama’s goal was to double foreign aid by 2012, but in his fiscal 2010 budget, which he spoke about at this February 26 White House campus event, he settled for just about a 10-percent increase in light of the current economic downturn.

AP

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With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments — providing them with freely usable cash. These corrupt governments interfere with the rule of law, the establishment of transparent civil in-stitutions and the protection of civil liberties, making both domestic and foreign investment in poor countries unattractive. Greater opacity and fewer investments reduce economic growth, which leads to fewer job op-portunities and increasing poverty levels. In response to growing pov-erty, donors give more aid, which continues the downward spiral of poverty.

This is the vicious cycle of aid. The cycle that chokes off desperately needed investment, instills a cul-ture of dependency, and facilitates

rampant and systematic corruption, all with deleterious consequences for growth. The cycle that, in fact, perpetuates underdevelopment, and guarantees economic failure in the poorest aid-dependent countries.

The countries that are the worst off, and the most aid-dependent, have been averag-ing minus 0.2 percent growth annually for three decades.

In the face of all of this evidence, many liberals (and “compassionate” alleged conservatives) have decided the answer is to have the United States and other West-ern governments step up their subsidies to those countries that have instituted reforms deemed appropriate to qualify for assis-tance. This was the rationale behind the creation of the Bush administration’s Mil-lennium Challenge Corporation (which, despite its name, is a government agency). Gerson, above, is such a promoter.

The Cato Institute, among others, isn’t buying that sales pitch. For good reason. As Ian Vasquez of Cato observes, “The most obvious problem with that program is that it is based on a conceptual flaw: countries that are implementing the right policies for growth, and therefore do not need foreign aid, will be receiving aid. In practice, the effectiveness of such selective aid has been questioned by a recent IMF [International Monetary Fund] review that found ‘no evidence that aid works better in better policy or geographical environ-ments, or that certain forms of aid work better than others.’”

When governments are hurting the poorest and most vulnerable people in the world, the most humane policy is to stop doing that — not to find another way that simply leaves scars in different places and enriches a new crew of pen-pushing bu-reaucrats and power-hungry despots. n

— williAm P. hoAr

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On April 10, President Obama emerged from a high-level

meeting with his economic team and proclaimed there were “glimmers of hope across the economy.” He be-lieved some of those “glim-mers” included his stimulus program and infrastructure work that he labeled “prog-ress toward getting the economy back on track.” Nevertheless, he was forced to admit that unemployment had hit a 25-year high of 8.5 percent in March, and many Americans are still losing their homes and jobs.

So, we ask: what more should a president do to deal with this serious economic downturn? Obama didn’t provide a specific answer but, speaking in generalities, he offered, “We’ve still got a lot of work to do.” So, without doubt, the nation can expect more of what he has already done — more federal spending, more regulation, more inflation, and, in short, more of precisely what history confirms government should not do to deal with recession’s scourge. History tells us over and over again that government action of the kind already taken and being planned will make matters worse.

Economist and historian Dr. Thomas Woods points out — and he isn’t alone — that getting out of a recession/depression can be accomplished if government gets out of the way. In other words, what President Obama and his team should do is nothing except abolish some government agencies. In Meltdown, his current best-seller, Woods recounts how our nation dug itself out of a very se-vere downturn immediately after World War I. “By the middle of 1920,” he reports, “conditions were worse than they would be in 1930 after the first year of the Great Depression.” Instead of deal-ing with the crisis with public works projects, Federal Reserve-created inflation, deficit spending for stimulus schemes, etc., the government and the Federal Reserve essentially did nothing dur-ing that period, and the nation recovered in less than two years.

The way our nation dealt with the 1920-1921 depression isn’t discussed by today’s economists, at least the vast majority who are captives to Keynesian socialist economics. There are two reasons why they ignore what happened close to 100 years ago: a) the problem was so short-lived, and b) it was solved, not by government, but by government standing aside and allowing the people to dig the nation out of the hole. The lesson is clear, even if most economists fail to mention it.

In his book, Woods shows that President Hoover initiated the completely opposite response at the outset of the Great Depres-

sion, an array of govern-ment actions that were then doubled or even tripled by President Roosevelt. Hoover raised taxes, provided gov-ernment loans to failing businesses, supplied states with federal funds, presided over inflationary monetary policy, and forced prices upward. The problem that started with the 1929 crash worsened. In 1932, while he was running for election, FDR labeled Hoover as the “greatest peacetime spender in the nation’s history.” Hav-ing won the presidency, he promptly outdid the defeated

Hoover by doubling or tripling every wrong-headed tactic. The Great Depression grew even greater and lasted all through the 1930s. Roosevelt had violated the first law of holes: when you’re in one, stop digging. He dug hard all through the 1930s.

Meltdown supplies a more recent example of how a nation should not attempt to cure a depression. Approximately 20 years ago, Japan had earned the envy of the world as mankind’s new-est economic marvel, even purchasing New York’s Rockefeller Center. The Japanese success had stemmed from massive in-flation and the inflation led to an inevitable bust that arrived in 1992 when housing prices sank by 80 percent and the Nik-kei stock exchange declined by almost two-thirds. So what did Japan’s government do? Exactly what it shouldn’t have done. Japan’s leaders launched huge public works projects, lowered interest rates to zero, provided loans to businesses, arranged for bailouts for banks and even nationalized some, increased the money supply, piled up enormous deficits, and dispensed a se-ries of stimulus packages for the people.

It is now 17 years since the recession hit Japan. And the prob-lem that surfaced in 1992 is still plaguing the nation.

There is a lesson in all of this for the United States, and one would have to be completely daft to ignore it. The Obama admin-istration’s treatment of our nation’s economic ills — duplicating and exacerbating actions taken by its predecessor — will make matters worse. Everything initiated by the Hoover-Roosevelt tandem is being repeated or planned. Each of the so-called cures administered by Japan is being copied.

We are forced to wonder whether what our leaders are doing results from stupidity or from a calculated desire to deepen the morass so that world currency and global governance — the twin recommendations being mentioned so frequently — will be ush-ered in. What is certain is that America’s current economic reces-sion, already being felt worldwide, isn’t about to disappear. n

Obama’s Counterproductive Plan


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